The IRS Released Draft Form 1099-DA: Key Updates You Need to Know
On April 19, the IRS released a draft of the new Form 1099-DA, setting the stage for how we’ll report digital asset transactions come 2025. This form is designed for brokers to use, reflecting last year’s proposed regulations.
If you’ve dealt with cryptocurrencies, stablecoins, or NFTs at any point in the tax year—whether buying, selling, exchanging, or otherwise handling these assets—you’ll likely need to include this form in your tax return.
With the latest draft released on Aug 2, the IRS has made some revisions to the initial version, aiming to refine the reporting process for these digital transactions. In this blog, we’ll explore the new changes and what they mean for your future tax filings.
What is Form 1099-DA?
Form 1099-DA (Digital Asset Proceeds from Broker Transactions) is an IRS form that reports digital assets (cryptocurrency, stakes, and NFTs) and online transactions. As brokers and taxpayers, you must use Form 1099-DA to report important information about your digital asset transactions. This includes digital asset payment processors and certain digital asset-hosted wallet providers. By doing so, you’ll be contributing to greater transparency and accountability in this rapidly growing sector.
New Draft for Form 1099-DA
Form 1099-DA has undergone some updates, with the most notable change being removing the requirement for broker-type details. IRS has released this new form that gives you more clarity, and it’s an additional tool for accurately reporting your digital asset transactions.
By improving third-party reporting, compliance with tax laws will be enhanced. This step helps ensure that digital assets aren’t used to hide taxable income, particularly in high-income categories. At the same time, it provides more information to report your income if you accurately play by the rules.
Here are the major changes in the fields:
Box 3b – There’s a new checkbox to mark if the proceeds come from a Qualified Opportunity Fund (QOF) transaction or you can reserve them for further use.
Box 7 – Cash proceeds
- Previously, there were separate fields for cash and non-cash proceeds, but in the new draft, you only need to check this box if you received cash.
Box 10 – Noncovered security
- This field used to have two parts, now, you only need to check if the digital asset sold was a noncovered security based on the reasons outlined on the form.
Box 11a – Gross proceeds
- Previously, 11a was used for the sale transaction ID. The new draft represents the aggregate gross proceeds from the sale of qualifying stablecoins or specified NFTs for the year.
Box 11b – The number of transactions
- Represents more than one transaction.
Box 11c – Shows the gross proceeds from the first sale of any specified NFTs you created or minted.
The updated draft of Form 1099-DA includes some changes to the text fields. As this is still an early draft, the form could undergo additional changes before its final release and the issuance of the instructions. The IRS has announced that Form 1099-DA will be available starting in 2025. We’ll keep you informed about any further updates from the IRS.
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