Coinbase’s New IRS Reporting Leaves Users Tackling Their Own Tax Calculations

One crypto accountant bluntly stated, "Seeing the 1099-DA from Coinbase is just the start. The real work begins when figuring out your actual gains." Coinbase’s rollout of the Form 1099-DA for the 2025 tax year marks a shift in how crypto sales and exchanges will be reported to the IRS, but it doesn’t simplify the tax filing process for users. While Coinbase sends the form directly to the IRS and makes it available to customers, this document only presents gross proceeds from crypto sales and trades visible on Coinbase’s platform, usually without cost basis information.

That means users are stuck with the responsibility of reconstructing the basis the original purchase prices of their assets alongside tracking transfers and combining Coinbase’s data with all other crypto activity across wallets and exchanges. This gap shows a lingering problem in crypto taxation: the IRS might get a detailed view of dispositions, but taxpayers must still compile accurate purchase histories themselves.

Form 1099-DA reports cryptocurrency sales and exchanges, including crypto-to-crypto trades that never convert to fiat currency. Gross proceeds reported can far exceed the actual cash invested, especially for frequent traders cycling assets repeatedly. Coinbase may also issue forms for income like rewards or staking but not all taxable events necessarily generate a form, so users can’t rely solely on these documents. Importantly, starting with 2025 tax filings, Coinbase’s Retail Tax Center will no longer supply Form 8949, pushing customers to prepare their own capital gains reports or enlist tax professionals and software.

A big headache remains with transfers. Moving crypto between wallets or exchanges owned by the same person is usually a non-taxable event, where the tax basis and holding period should move with the asset. But Coinbase often lacks data about original purchases made elsewhere. For example, if Bitcoin was bought years ago on another platform, then transferred through a hardware wallet before being deposited and sold on Coinbase, the exchange only sees the most recent deposit and sale, missing key acquisition details. This disconnect creates gaps in reporting that users must fill to avoid miscalculations and potential IRS penalties.

This content provides general information and does not constitute financial advice.