The U.S. Internal Revenue Service (IRS) has introduced an updated draft of the 1099-DA tax form. It is designed for crypto brokers and investors to report specific transactions. This new form, effective in 2026, aims to streamline reporting while addressing privacy concerns.
Simplified Process for Crypto Investors
Crypto investors who use brokers, especially on centralized exchanges like Coinbase and Kraken, will report taxable events related to digital assets using the 1099-DA. The IRS has simplified this draft compared to the one first proposed in April.
Major Changes in the Revised 1099-DA Form
The updated form no longer requires investors to enter their wallet addresses or transaction IDs, which had raised privacy concerns. It also removes the need to include transaction times, asking only for dates. This change significantly reduces the amount of sensitive information disclosed.
Additionally, the form no longer requires filers to specify the type of broker involved. The earlier draft listed options like “kiosk operator” and “digital asset payment processor,” but this section has been removed, making the form less complex and invasive.
Future Regulations for Decentralized Brokers
This revision follows the IRS finalizing regulations for crypto broker reporting just two months ago. The IRS plans to issue separate regulations later this year for decentralized and non-custodial brokers, which are not covered by the current rules.
Raj Mukherjee and Seth Wilks, Directors at the IRS Office of Digital Asset Initiative, emphasized the importance of the new form. They believe it will help taxpayers navigate the complexities of digital asset reporting. The form, along with recent broker regulations, will simplify reporting for digital asset gains and losses starting in the 2025 tax year.
Public Feedback on the 1099-DA Form
The IRS has opened a 30-day comment period for public feedback on the proposed 1099-DA. This allows stakeholders to voice their opinions before finalization.
Global Taxation of Cryptocurrency Gains Momentum
As the digital currency market grows, more countries are moving to tax cryptocurrency holdings.
Brazil Imposes New Crypto Taxes
Brazil has introduced legislation effective January 1, 2024. It imposes a tax of up to 15% on profits from cryptocurrencies held overseas by Brazilian nationals.
India’s Stringent Crypto Tax Policies
India continues to enforce strict taxes on crypto transactions. The country maintains a 30% tax on profits and a 1% Tax Deducted at Source (TDS) on all transactions.
UK’s Approach to Crypto Taxation
The UK’s taxing authority recently asked crypto users to disclose any unpaid taxes to avoid fines. This move reflects the global trend of increased cryptocurrency taxation.
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