Crypto Tax Filing Nightmare: Investors Struggle with Incomplete IRS Forms

The US tax filing season has brought a new challenge for cryptocurrency investors as they navigate the first year of IRS reporting requirements.

A survey conducted by Awaken Tax found that 21% of respondents who had filed or planned to file a tax extension were still waiting for information from an exchange or crypto platform, while one in five said their 1099-DA form was incomplete or inaccurate.

The new rules require brokers to report gross proceeds from certain digital asset sales, but not the cost basis. This means taxpayers must calculate their gains and losses themselves, which can be a daunting task for active traders.

Chris Herbst of CountDeFi tax reporting notes that for an active trader, the number of gains can be many times their real gain due to unreported costs.