IRS Unveils Simplified 1099-DA Tax Form for Crypto: Key Updates for 2025

The US Internal Revenue Service (IRS) has recently introduced a new draft of the 1099-DA tax form, significantly revising the initial version released in April 2024.

This form is essential for crypto brokers and investors to report certain transactions involving digital assets. Available for public review on the IRS website for the next 30 days, the updated draft addresses several previous concerns and aims to simplify the reporting process for the 2025 tax season.

Significant Adjustments in the New Draft The latest updates to the 1099-DA form include several key changes designed to enhance privacy and ease the filing burden:

The IRS seems to have updated its crypto brokerage tax form to remove requests for digital wallet addresses, among other information.

Form 1099-DA is slated to go at least partially into effect in 2025. pic.twitter.com/3vh9uwC0lV

— CryptoNewsZ (@cryptonewsz_) August 12, 2024

• Investors are no longer required to disclose wallet addresses and transaction IDs, addressing major privacy concerns.
• The form simplifies the reporting requirements by only needing the date of transactions, not the specific times.
• Crypto brokers are relieved from having to specify their type of brokerage on the form. Raj Mukherjee and Seth Wilks from the IRS Office of Digital Asset Initiatives commented, “The new Form 1099-DA will facilitate taxpayer compliance in the increasingly complex digital asset landscape.”

Industry Reactions and Calls for Further Improvements Crypto tax experts have welcomed the modifications, noting significant improvements in form clarity and usability. Jessalyn Dean from Ledgible remarked, “The initial draft was a challenge to navigate. This iteration simplifies understanding and action for the users.” However, concerns remain about comprehensive privacy protections. 

IRS Softens Stance On Crypto: New Draft Eases Tax Filing Burden

The IRS, or US Internal Revenue Service, has unveiled a fresh draft version for the 1099-DA tax form, used by crypto brokers and investors to report certain digital asset transactions from the upcoming tax period in… pic.twitter.com/LtIfDh4SEJ

— 3.0 TV (@reallive3tv) August 12, 2024

Andrew Rossow, attorney and CEO at AR Media Consulting, praised the strides towards safeguarding privacy but highlighted the necessity for more substantial changes. “While the IRS has focused on central exchanges, the unique dynamics of the decentralized finance ecosystem are still underappreciated,” Rossow stated, emphasizing the potential risks to innovation and equity in the industry due to uneven regulations.