It's tax season in the United States once again, and this year the Internal Revenue Service (IRS) knows more about Americans' crypto trading than ever before. Under the agency's new rules, brokers are required to report gross proceeds from certain digital asset sales. Yet for many taxpayers, receiving a form from an exchange has done little to make filing any easier.

A survey of 1,000 US crypto investors, conducted in August by Awaken Tax, found that 21% respondents who had filed — or planned to file — a tax extension said they were still waiting for information they needed from an exchange or crypto platform. A further one in five said their 1099-DA, the tax form brokers use to report certain digital asset sales, was either incomplete, or they were unsure whether it accurately reflected their transactions.

The numbers capture a filing season unlike any before it: the first under the new reporting rules. Taxpayers who filed for an extension have until Oct. 15 to submit their returns.

For 2025, brokers were generally required to report proceeds — how much an asset sold for — but not cost basis, meaning how much the taxpayer originally paid for it. That leaves taxpayers to calculate their own gains and losses, which is no small task even for infrequent traders and a time-consuming quagmire for active ones.

"For an active trader, that number can be many times their real gain, because each sale is counted at full value with no cost against it," Chris Herbst, managing director of tax reporting firm CountDeFi, told Cointelegraph Magazine.

That gets to the heart of the problem: the IRS can see the sale, but the taxpayer still has to work out what they actually made.

What the new 1099-DA actually tells the IRS

For a simple transaction, the calculation is straightforward. An investor who bought Bitcoin for $9,000 and sold it for $10,000 realized a $1,000 gain. But a 2025 1099-DA could show the $10,000 in proceeds without reporting the $9,000 basis needed to calculate that gain, according to IRS guidance on Form 1099-DA.

If a taxpayer does not know how much they originally spent on a particular crypto asset, working out the math can become a Byzantine exercise. It means taxpayers need their own records to fill in the missing pieces, including information that may stretch across multiple exchanges, wallets, trades and years.

"The gap is real, but it is a record-keeping gap on the taxpayer side as much as a reporting gap on the exchange side," Herbst said.

Related: US House tax committee advances crypto tax overhaul in 38–5 vote

When the forms don't match

Tax professionals say they are already seeing problems as taxpayers try to reconcile the new forms with their transaction histories.

Sharon Yip, founder of Crypto Tax Advisors, said her firm has found discrepancies between the 1099-DAs received by clients and the crypto tax reports it prepared for them. Some forms did not include all of the trades made during 2025, she said, while exchanges also used different formats for their customer statements.

Some exchanges reported cost basis on certain trades but not others, even though reporting basis was not mandatory for 2025. "It's very confusing for recipients to understand how to reconcile their 1099-DAs when compared to the crypto tax report they should use to file their tax return," Yip said.

She offered one example involving stablecoins: a client of her firm traded more than $300,000 in stablecoins on an exchange in 2025, but the exchange's 1099-DA showed less than $100,000 in total stablecoin proceeds.

The problems can start before taxpayers even get to calculating their gains. Andrew Duca, founder of Awaken Tax, said the firm saw customers receiving 1099-DAs relatively late in the filing season.

"Because this regulation is new, a lot of exchanges are still trying to figure it out," he said, pointing to exchanges like Kraken that "didn't send any forms to users until two weeks before the tax deadline of April 15."

Duca says Kraken only sent 1099-DA forms two weeks before the deadline (source: Andrew Duca on X). He also cited the example of a Kraken 1099-DA from around the same period that showed no reported transaction information.

Kraken did not respond to a request for comment from Cointelegraph Magazine.

The information taxpayers still need

The new forms were never intended to replace taxpayers' own records. The IRS says taxpayers must report digital asset income and gains or losses whether they receive a 1099-DA or not.

Where the basis is not reported, taxpayers should use their own records to complete their tax returns — but that gets complicated quickly when crypto assets move frequently between platforms. An investor might buy Bitcoin on one exchange, transfer it to a private wallet, move it to another exchange and sell it there, and the second exchange has no information showing what the investor originally paid. Further details are outlined in IRS materials on Form 1099-DA.

"The full transaction history from the day the account opened" is what taxpayers need from exchanges, Herbst said. That includes trades, fees, deposits, withdrawals and transaction identifiers, such as the wallets involved.

Basis follows the asset as it moves between platforms, he explained, which means one missing piece of transaction history can affect a gain calculated years later on another exchange.

Related: Chainalysis estimates $457B in taxable crypto activity, says CARF misses most

More data for the IRS, more work for taxpayers?

Andrew Gordon, executive director of Digital Asset Tax Action, said taxpayers are "constantly" struggling to reconcile 1099-DAs with their own records during the 2025 filing season.

He said most crypto tax software lacks tools to import and reconcile 1099-DA, and the few products that do still require manual entry because brokers did not provide the 2025 forms in a machine-readable format.

For active traders, manually entering the information can mean hundreds of individual entries. Gordon argued that brokers should provide a machine-readable file alongside every 1099-DA so the information can flow directly into tax software, and that exchanges should maintain complete transaction histories, including acquisition dates, amounts paid, fees and transfers.

His concern is that the IRS's increased visibility does not translate into a complete tax calculation for the taxpayer. "The 1099-DAs only reported proceeds in 2025, and proceeds reporting gives the IRS visibility it did not previously have," he said — however, "visibility without basis produces the zero-basis problem."

The upshot: taxpayers should not blindly copy the numbers from a 1099-DA onto their tax returns. Duca advised comparing the form against a complete transaction history rather than automatically accepting its figures.

"The IRS expects your return to reflect your actual gains and losses, not necessarily what's printed on a form that the exchange may have worked out incorrectly," he said.

Will 2026 make things easier?

While crypto taxpayers are still grappling with the 2025 filing season, more changes are on the way. From 2026, brokers must generally report cost basis for covered digital assets, which will give taxpayers more information to calculate their gains and losses.

However, assets transferred to a broker from another exchange or wallet can still fall outside those requirements.

So the IRS may know more about Americans' crypto trades than ever — but when it comes to working out what is actually owed, taxpayers still need to keep the receipts.

Related: Winners and losers of the SEC's new tokenized stocks rules

Source: Cointelegraph Magazine