Crypto Tax Forms Explained 2025: 8949, 1099-DA & More

Dealing with taxes yearly, let alone crypto taxes in 2025, might feel like a never-ending maze, especially with the new IRS regulations and forms like Form 1099-DA. Count on Sheep's got you covered. We will walk you through the crypto tax forms explained, including the 8949, 1099-DA, and other relevant guides that you must file. This will help you stay on track, avoid costly mistakes, and accurately report your transactions.

Key Takeaways

• The new IRS Form 1099-DA will be introduced in 2025 to report cryptocurrency sales and transactions directly to the IRS, and it’s important for your tax return.

• Even with the new form, you still need to complete Form 8949 to report your capital gains and capital losses from crypto.

• Any crypto income from airdrops or staking will be reported using Form 1099-MISC or on Schedule 1 of your tax return.

• Filing your crypto taxes accurately helps you avoid IRS audits, penalties, and delays in processing your return.

• If you have complex crypto transactions or aren’t sure about the rules, it’s smart to work with a tax professional to make sure you stay compliant.

Form 8949: Reporting Crypto Sales, Trades, Capital Assets & Disposals

When you sell, trade, or use crypto, it's officially considered a taxable event. You’ll need Form 8949 to report key details, including when you acquired and sold the crypto (gross proceeds), how much you paid (cost basis) and earned, and your capital gains or losses.

Form 8949 is divided into two sections:

• Part I: Short-term gains for crypto transactions held one year or less (short-term capital gains)

• Part II: Long-term gains for crypto transactions held more than one year (long-term capital gains)

You’ll also need to select Box A, B, or C, depending on whether you received Form 1099 B and whether your cost basis was reported. Most crypto investors or digital asset brokers will use Box C or F since many exchanges don’t report basis to the IRS.

Some common mistakes when filing Form 8949 include leaving out cryptocurrency transactions and digital assets, miscalculating your cost basis, or confusing short-term and long-term gains.

Tip: Keep track and record year-round, and consider using crypto tax software or hiring a tax professional to ensure your Form 8949 is complete and error-free.

Keeping detailed records ensures accurate reporting of your capital gains and lowers the risk of overpaying or underpaying your tax liability. Remember: Short-term capital gains are taxed at ordinary income rates, while long-term gains are taxed at lower rates.

You can’t rely solely on broker forms, especially as transferred digital assets between platforms often lack consistent reporting. Using crypto tax software can simplify your tracking and automatically generate the necessary IRS forms for submission.

Form 1099-DA: New Digital Asset Reporting Form, Crypto Tax Reporting

Starting in 2025, digital asset exchanges and brokers will be required to file Form 1099-DA to report the gross proceeds from crypto transactions and NFT sales to the IRS. This new form will include broker reporting requirements such as:

• Broker's name and identifying info

• Your Taxpayer ID (SSIN or EIN)

• Total gross proceeds from digital asset transactions and gross income

It's important to note that Form 1099-DA will not include your cost basis (the amount you originally paid) until at least 2026. Be aware that this process involves tracking your cost basis to accurately calculate long-term capital gains and short-term capital losses, and avoid paying more tax than necessary.

Even if you do not receive Form 1099-DA, digital asset market participants must still report all crypto transactions, crypto investments, and tax calculations on your tax filings, IRS form, or returns. The IRS gets copies of these forms from digital asset exchanges and cross-checks them against your tax filings.

If you moved crypto across wallets or platforms, those transfers won’t appear on Form 1099-DA. Maintain your documentation to reconcile transfers and prove non-taxable events versus digital asset sales.

Other Key Crypto Tax Forms You Might Encounter

Beyond Form 8949 and Form 1099-DA, other IRS forms play critical roles in your crypto tax reporting. Each form requires unique digital asset transactions, types of crypto income, digital assets sold, transactions reported, and specific IRS reporting requirements. Let’s break down how these forms summarize your investment income, property transactions, gross income, and short-term transactions reported.

Form 1099-MISC: Reporting Staking Rewards, Airdrops, Capital Gains, and Interest Income

If you are someone who earned interest income, staking rewards, or received airdropped tokens valued at $600 or more, you might receive a Form 1099-MISC from digital asset brokers or digital asset payment processors. This form reports gross income that isn’t tied directly to sales or trades of crypto assets. You must include this income on Schedule 1 (Form 1040) as ordinary income. Even if you don’t receive Form 1099-MISC, IRS rules require you to report all crypto income and foreign income to remain in tax compliance.

Keep detailed records of any digital asset proceeds received as rewards, staking, or airdrops to avoid missing reportable income and capital assets. Failing to report this gross income as a crypto investor on your tax return could increase your tax bill or trigger penalties.

Form 1099-K: High-Volume Crypto Payments Reporting

For crypto users processing over $20,000 in payments across more than 200 transactions annually, Form 1099-K may apply to you. Issued by digital asset payment processors or platforms facilitating payments, this form reports your gross proceeds and digital asset transactions from appropriate transactions.

Please note that the thresholds for Form 1099-K reporting are subject to change. Always verify current IRS requirements. While Form 1099-K reports gross proceeds, it doesn’t report cost basis or account for transaction fees, leaving you responsible for calculating gain or loss for your tax return. It's crucial to retain documentation of each transaction's purchase price, acquisition date, and related costs to calculate your capital gains or net gain accurately.

Schedule 1 (Form 1040): Miscellaneous Crypto Income

Several types of crypto income and capital gains—like rewards from liquidity provider transactions or payments not reported on other forms—must be reported on Schedule 1 (Form 1040) under additional income.

Including earnings from foreign corporation exchanges or decentralized finance platforms that aren’t subject to U.S. broker reporting rules. It's required to disclose these earnings even without a Form 1099-B to ensure accurate reporting and avoid underreporting your gross income. Keep in mind, U.S. taxpayers must report crypto income or capital assets from domestic and foreign platforms, even when broker reporting requirements don’t apply internationally.

Recordkeeping & Tax Planning Tips for Crypto Investors

As enforcement expands, staying organized is critical. Reporting sales and good recordkeeping support accurate tax filings, simplify tax calculations, and reduce errors that lead to audits.

• Track every digital asset lot reported, including acquisition date, purchase price, wallet, and exchange

• Record transaction details for every trade, sale, or swap, including transaction fees deducted

• Save confirmations or CSV exports from all digital asset exchanges you use

• Use crypto tax software to generate IRS forms like Form 8949 and Schedule D

Strategic moves, such as tax-loss harvesting, can offset gains and reduce taxable income. Consulting a crypto tax professional helps you explore taxable income strategies like reporting specific lots or identifying deductions from liquidity provider transactions. If you held qualified community assets or DC zone assets, discuss these with a professional to optimize your filing.

Why Accuracy in Crypto Taxes Matters

Crypto tax enforcement is increasing. Therefore, inaccurate or incomplete tax reporting can trigger:

• Audits

• Penalties & interest

• Frozen refunds or delayed processing

If you sold cryptocurrency held on a limited-access, regulated network, be prepared to provide customer-provided acquisition information to substantiate your cost basis or other tax details.

The IRS increasingly cross-references broker transactions and transactions reported via Form 1099-DA or Form 1099-B. Ensuring your records match reported figures lowers audit risk. Gain or loss calculations depend on accurately matching digital asset proceeds and the original purchase price. Brokers aren’t yet required to furnish complete data, leaving the burden on you.

Staying Ahead of Evolving Crypto Tax Laws

Future tax regulations may introduce new forms or an optional reporting method for decentralized trades and transactions on distributed ledgers. Until then, it's essential to err on the side of comprehensive reporting to ensure compliance.

Track each digital asset lot reported across wallets, exchanges, and brokers. Save transaction details, including timestamps, wallet addresses, transaction fees, and transfer confirmations, for future reference. Use crypto tax software to consolidate records, calculate gain or loss, and generate IRS-compliant tax forms like Form 8949.

Should You Work with a Crypto Tax Pro?

Crypto taxes can be challenging, especially if you:

1. Traded across multiple digital asset exchanges

2. Earned rewards from staking, lending, or liquidity provider transactions

3. Transferred crypto across wallets or platforms

A crypto tax professional can:

• Prepare accurate Form 8949, Form 1099-DA, Schedule D, and other filings

• Verify cost basis, accrued market discount, and properly allocate gain or loss

• Provide audit-ready records and defense

• Advise on future-proof tax planning and strategy

Need help? Contact Count On Sheep Crypto Tax Services for a free consultation. We specialize in crypto tax reporting, compliance, and strategic tax-saving solutions.

FAQs: IRS Crypto Tax Forms & Form 1099 B Explained

Q: Do I need Form 8949 if I didn’t sell crypto?
A: No—only if you sold, swapped, or spent crypto.

Q: Will I automatically get a 1099-DA?
A: Not necessarily. Some brokers may delay issuing them in 2025; however, you must still track transactions.

Q: Is staking income reported on Form 8949?
A: No—staking rewards are ordinary income reported via 1099-MISC or Schedule 1.

Stay compliant, stay informed. Crypto tax reporting isn’t optional—it’s essential for protecting your finances, reputation, and tax compliance.

As tax year 2025 ends, watch for evolving guidance on broker reporting requirements and the future integration of digital assets proceeds tracking into IRS systems.