IRS 1099-DA 2026: What Every Crypto Tax Software User Needs to Know

The IRS Form 1099-DA (“Digital Asset Proceeds From Broker Transactions”) takes effect for the 2026 tax year, making it the most significant change to US crypto tax reporting since the 2014 IRS Notice that first classified virtual currencies as property. Starting with 2026 transactions, US-regulated crypto brokers — including centralized exchanges, certain DeFi platforms, and digital asset custodians — must report customer disposal proceeds to the IRS on Form 1099-DA, with copies sent to customers by January 31, 2027.

This guide explains what 1099-DA means for crypto traders, what the covered/noncovered securities distinction means for cost-basis reporting, and which crypto tax software tools are equipped to reconcile 1099-DA data.

What 1099-DA Requires

Form 1099-DA requires brokers to report:

• Proceeds from disposals of digital assets (sales, swaps, and certain transfers treated as disposals)
• Cost basis for “covered securities” — digital assets acquired on or after January 1, 2025 that the broker tracked from acquisition
• Acquisition date and proceeds for all reported disposals

The 1099-DA mirrors Form 1099-B (the stock broker reporting form) in structure but introduces several crypto-specific complications.

Covered vs. Noncovered Securities

The most important concept for reconciling 1099-DA data with your own records is the covered/noncovered split:

Covered securities: Digital assets acquired on or after January 1, 2025 on a 1099-DA-reporting broker. The broker tracks both acquisition cost and proceeds and reports both on 1099-DA. These entries should reconcile cleanly with your crypto tax software records if you purchased on the same broker and never moved the assets.

Noncovered securities: Digital assets acquired before January 1, 2025 (regardless of broker), or acquired after 2025 but transferred in from another wallet/exchange where the broker cannot verify the acquisition cost. For noncovered disposals, the broker reports proceeds only — not cost basis. The taxpayer (and their crypto tax software) must provide the correct cost basis.

The practical implication: most crypto traders with multi-year portfolios or cross-exchange activity will receive 1099-DAs that report proceeds for assets the IRS will treat as zero-cost-basis if the taxpayer does not correctly report their true acquisition cost. This creates a tax liability that does not exist if properly documented — the primary source of 1099-DA confusion and overpayment risk.

The Cost-Basis Mismatch Problem

1099-DA introduces a systematic mismatch problem that did not exist under voluntary self-reporting:

1. A trader buys 1 BTC on Coinbase in 2022 at $20,000.
2. In 2025, the trader moves the BTC to Kraken. Kraken cannot verify the 2022 Coinbase acquisition.
3. In 2026, the trader sells the BTC on Kraken for $95,000. Kraken reports $95,000 proceeds on 1099-DA, marks it “noncovered,” and reports $0 cost basis.
4. If the trader does not provide their $20,000 cost basis on Form 8949, the IRS sees $95,000 of apparent capital gain instead of $75,000.

Crypto tax software that maintains complete transaction history across all wallets and exchanges is the solution to this mismatch. The software provides the correct cost basis from the 2022 Coinbase purchase to offset against the 1099-DA-reported proceeds from the 2026 Kraken sale.

Which Crypto Tax Software Handles 1099-DA

The leading crypto tax software platforms have updated their 1099-DA reconciliation features for the 2026 tax year. Key capabilities to verify:

1099-DA import and matching: The software should import 1099-DA files directly from exchanges (CSV or IRS-standard format) and automatically match reported proceeds to the corresponding transactions in your portfolio history.

Noncovered basis resolution: The software should flag all noncovered disposals on imported 1099-DAs and prompt the user to confirm or correct the cost-basis calculation from the software’s own historical records.

Form 8949 output: The software should generate a Form 8949 that correctly codes covered transactions (Box A/D) and noncovered transactions (Box B/E) per IRS instructions, with the taxpayer’s correct cost basis shown for noncovered disposals.

IRS discrepancy alerts: Advanced platforms will compare the 1099-DA reported figures against the software’s own calculations and flag discrepancies before filing, which is the primary value-add for the 2026 season.

Koinly, CoinTracker, TaxBit, Recap (UK/EU), and Blockpit (EU) have all announced 1099-DA reconciliation features. Verify the feature is live and tested before recommending any platform for the 2026 tax season.

UK/EU/CA: CARF and the Global Reporting Convergence

While 1099-DA is US-specific, it is part of a broader global trend toward mandatory crypto broker reporting. The OECD’s Crypto-Asset Reporting Framework (CARF) — adopted by the UK (effective 2026 data, reported 2027), the EU (through DAC8, effective 2026), Canada, and Australia — creates parallel reporting obligations for crypto exchanges operating in those markets.

For affiliates serving multi-market audiences, the practical implication is that crypto tax software that handles 1099-DA (US) and CARF-compatible exports (UK/EU/CA/AU) is the highest-value recommendation. TaxBit and Koinly have multi-jurisdiction coverage; Recap is UK/EU-focused; Koinly AU is the market leader in Australia for ATO compatibility.

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Source: IRS Digital Assets resource center — https://www.irs.gov/businesses/corporations/digital-assets