2026 Tax Filing | Major Changes in Form 1099-DA Reporting
Edited By
Maya Singh
As the 2026 tax season approaches, taxpayers face significant changes in how they report digital assets. These updates, driven by IRS mandates, are causing concern among people navigating tax complexities related to cryptocurrency.
Exploring the Major Changes
In 2025, brokers only had to report gross proceeds from asset sales. However, new regulations require them to also disclose the cost basis for covered assets starting in 2026. This means taxpayers will no longer need to manually calculate their basis for these assets, reducing the burden of heavy manual reconciliation seen in prior filings.
Costs and Benefits of Reporting Changes
Gross Proceeds: 2025 saw a simpler report structure, comparing to the added requirements in 2026.
Cost Basis Reporting: Previously optional, now mandatory for covered securities.
IRS Basis Communication: In the past, the IRS didn’t receive basis information; now it will for covered digital assets.
Curiously, one commenter noted that "covered assets are tokens that were only bought and sold on that exchange." If assets leave and return, basis tracking may become problematic, potentially misleading many taxpayers.
Mismatch Risks and Filing Efficiency
People are currently facing a greater risk of IRS mismatch notices for non-covered assets. As one comment suggests, "This is going to bite a lot of people expecting to just upload a 1099-DA." Restructured processes are expected to streamline reporting; however, challenges around wallet transfers and reconciliation remain.
"Some of these updates appear to suggest a future with fewer mismatches, yet the path is still fraught with uncertainties," shared a blockchain accountant.
Key Updates and Insights
▽ For 2026, cost basis reporting is now mandatory for eligible securities.
✦ The IRS will receive basis info for covered digital assets, unlike previous years.
✎ Mismatch notices may lower due to increased automation, though risks persist with asset transfers.
While frustrations swirl in the community, it looks like changes could simplify the tax process in the long run. Will these adjustments serve the intended purpose, or will they complicate the process further? Only time will tell as the tax deadline looms.
What Lies Ahead for Taxpayers
As the 2026 tax deadline approaches, there’s a strong chance that more people will face complications due to the newly mandated cost basis reporting. Experts estimate that over 60% of taxpayers may encounter challenges related to asset transfers, especially for those who frequently trade cryptocurrencies. This could lead to a rise in IRS mismatch notices as people may not fully grasp the implications of reporting their non-covered assets. While the goal is to streamline the filing process, the transition could be rocky for many, particularly those unfamiliar with the digital landscape. Adaptation to these changes may take time, and some individuals might seek professional advice to navigate the complexities.
Reflecting on the Past: A Lesson from the Dot-Com Bubble
Looking back to the dot-com bubble of the late 1990s, there’s an interesting parallel. Just as investors grappled with the complexities of emerging internet companies and their regulations, today's taxpayers are facing a similar learning curve with digital assets like cryptocurrencies. Both situations involved rapidly changing environments where people had to adapt to new rules and technologies, often leading to financial missteps. The dot-com era saw a wave of innovation accompanied by essential regulatory hurdles, much like what crypto is experiencing now. In both cases, those who could effectively manage the learning curve stood to gain, while others faced challenges in untangling the tax implications of their digital transactions.