January 19, 20268 min readBlockchain Smart Tax

IRS Crypto Reporting Requirements 2026: What's New

The latest IRS crypto reporting requirements for 2026. Form 1099-DA, Form 8949, Schedule D, the digital asset question on 1040, and broker reporting rules.

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The IRS Knows More About Your Crypto Than You Think

IRS enforcement of crypto tax compliance has escalated dramatically. Starting with tax year 2025 (returns filed in 2026), the agency receives transaction-level data directly from centralized exchanges via Form 1099-DA. The IRS has also contracted with blockchain analytics firms to trace on-chain activity. The era of "the IRS can't see crypto" is over.

Form 1099-DA: The New Broker Reporting Rule

The Infrastructure Investment and Jobs Act of 2021 expanded the definition of "broker" to include crypto exchanges and required them to file Form 1099-DA starting with tax year 2025. Key details:

Who must file: All "digital asset brokers" — centralized exchanges (Coinbase, Kraken, Gemini, Binance.US, etc.) and some DeFi front-ends that meet the broker definition
What's reported: Proceeds from sales and exchanges, acquisition date and cost basis (where known), and the recipient's name and Social Security number
When you receive it: By February 15 of the following year (same as 1099-B)
What's NOT covered: Self-custody wallets, peer-to-peer transactions, most DeFi protocols, and DEXes without a controlling front-end entity

If you receive a 1099-DA with incorrect cost basis (common for assets transferred from another platform), you can correct it on Form 8949 using an adjustment code. Do not just accept the exchange's reported basis if you know it's wrong.

The Digital Asset Question on Form 1040

Since 2019, the front page of Form 1040 has asked: "At any time during [year], did you receive, sell, exchange, or otherwise dispose of any digital assets (such as cryptocurrency, digital assets, stablecoins, and NFTs)?"

You answer Yes if you: sold, traded, spent, received as payment, received as a reward/staking/mining, received as an airdrop, or disposed of crypto in any way. You can answer No only if you merely held crypto or bought it with fiat and did nothing else. Lying on this question is a misrepresentation on a signed federal return — separate from the underlying tax liability.

Form 8949: Transaction-Level Reporting

Every crypto disposal must be reported individually on Form 8949. Each row includes: description, acquisition date, sale date, proceeds, cost basis, adjustment codes (if applicable), and gain or loss. The IRS explicitly requires this detail for cryptocurrency — you cannot simply report a net gain on Schedule D without the underlying transaction detail for crypto (unlike some other asset classes).

Form 8949 has three columns for cost basis reporting status:

Column A/D: Basis reported to IRS (the exchange provided it on 1099-DA)
Column B/E: Basis NOT reported to IRS (you must calculate it yourself)
Column C/F: Transactions for which you did not receive a 1099

Schedule D: Capital Gains Summary

Form 8949 rolls up into Schedule D, which separates short-term (Part I) and long-term (Part II) gains and losses, applies prior-year carryforwards, and computes the net capital gain or loss. The final number flows to Form 1040 Line 7.

Crypto Income: Schedule 1 and Schedule C

Staking rewards, mining income, airdrops, and crypto interest are ordinary income, reported on:

Schedule 1, Line 8z (Other Income) — for individuals receiving crypto income as investment activity
Schedule C (Business Income) — for miners, validators, or others operating crypto as a business; self-employment tax (15.3%) also applies

FBAR and FATCA for Foreign Exchange Accounts

US persons with more than $10,000 in offshore crypto exchange accounts (e.g., Binance.com, Bybit, OKX) at any point during the year must file:

FBAR (FinCEN 114) — due April 15, auto-extended to October 15 — failure to file: up to $10,000/year civil penalty
Form 8938 (FATCA) — filed with your 1040 — higher thresholds ($50K–$200K depending on filing status), higher penalties

Per-Wallet Cost Basis Compliance

Under Rev. Proc. 2024-28 (effective January 1, 2025), you must track cost basis per wallet/exchange account — not universally pooled. This is now a compliance requirement, not just a best practice. Software that uses universal pooling is producing non-compliant calculations. Blockchain Smart Tax enforces per-wallet tracking for all accounts.

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