New US Crypto Tax Rules May Confuse Investors This Year

If you own cryptocurrency in the United States, this tax season might be more complicated than usual. The IRS (the US tax authority) has introduced new rules that could leave many crypto investors scrambling to find old records.

What's Changing?

Starting this year, crypto exchanges like Coinbase and Kraken must send you a new tax form called 1099-DA. This form tells the IRS how much money you received when you sold your crypto. But here's the catch: it doesn't say how much you originally paid for it.

For example: • If you sold Bitcoin for $100,000, that's what gets reported • But if you bought that Bitcoin for $80,000, you need to prove it • Without proof, the IRS might think the entire $100,000 is profit

Why This Matters

You only pay taxes on your profit (called capital gains), not the total sale amount. If you can't prove what you originally paid, you might end up paying more taxes than you should. This is especially tricky if you: • Moved crypto between different exchanges • Used multiple wallets • Made lots of small transactions • Lost your old records

What Happens Next?

Experts are divided on whether the IRS will send warning letters or conduct audits this year. Since this is the first year of the new system, they might go easy on people. However, if there are big differences between what exchanges report and what you claim on your taxes, you might get a letter asking for clarification.

The good news: Starting in 2026, exchanges will be required to track and report both what you paid and what you sold for, making things much simpler.

Bottom Line: If you traded crypto in 2025, start gathering your records now. You'll need to know what you paid for every crypto asset you sold.

This is an AI-generated summary. Read the original article at: https://www.theblock.co/post/393574/irs-crypto-reporting-rules-set-stage-for-confusing-tax-season-heres-what-you-need-to-know?utm_source=rss&utm_medium=rss