Holy hell. This tax season feels like driving down a bumpy dirt road at 80mph. The sheer amount of 1099-DA posts in the last 48 hours is overwhelming. So many people asking the same questions... paired with pervasive fear mongering on every social platform I go on -- I want to bang my head against a wall. Clearly a lot of confusion in the air.

I’m a CPA specializing in crypto tax, a mod of r/CryptoTax, and a product lead at Summ, a crypto tax software company. I wrote a full guide on how to NOT OVERPAY TAX here. This post will serve as a no-BS guide to what actually matters, where common pitfalls are, and answers to the most frequently asked questions.

Disclaimer: Not tax advice, educational purposes only, consult your own tax professional

Quick summary before you read:

• Accurately reporting all your activity is what you should be focused on
• The 1099-DA is the start of the conversation, not the way you file your crypto taxes
• It is informational, not your tax return
• It does not replace Form 8949
• For 2025, cost basis is NOT reported to the IRS, and the reports provided to you may have $0 or "unknown" cost basis (by design)
• Missing basis ≠ taxable gain
• Blindly importing or relying on this form is how people overpay tax

What do I do with the 1099-DA?

As I mentioned in the guide to not overpaying your tax, using the 1099-DA alone will likely result in overpayment due to the missing/unknown basis.

If you've only ever traded on a single exchange, have never transferred any assets in to an exchange (in 2025 or prior), and your 1099-DA includes accurate cost basis for all disposals, then the next steps are not for you. For everyone else, here's what I suggest:

Step 1. Import your 1099-DA into a crypto tax software

Step 2. Add in your other wallets and exchanges as applicable (including DeFi wallets and non-US exchanges)

Step 3. Review your transactions to ensure consistency between the software and the 1099-DA

Step 4. Download your 8949/Sch D ready to file

Ok, but do I NEED to use a crypto tax software?

Absolutely not. For the excel freaks out there, would love to see what you come up with.

If your activity is simple (one or two exchanges) and you’re confident in your cost basis tracking (e.g., properly applying FIFO across transfers and disposals), you can probably manage without software.

Software is simply a tool to:

• Aggregate data
• Ensure you’re not underreporting taxable activity
• Prevent overpaying by tracking and filling in missing basis
• Provide a paper trail to support your calc

Do I file the 1099-DA in my return?

No. The 1099-DA is informational only. You use it to help build your 8949, which is what you actually file.

Why is my cost basis "unknown"?

Simple. Exchanges do not know the cost basis for any asset transferred into a platform. This includes assets:

• Bought off the exchange and transferred in
• Bought on the exchange, transferred off, then transferred back in

There’s no way for the exchange to know it’s the same asset. So basis is reported as “unknown.”

That said, under IRS Notice 2025-7 Section 4.02 (Temporary Relief), taxpayers may calculate and use their own lot identification if they maintain adequate records and properly identify lots. This means you can report your cost basis using your own records.

What's included (and not included) on the 1099-DA?

The 1099-DA does not cover all your taxable crypto activity.

Transactions typically included:

• Crypto → fiat sales
• Crypto → crypto trades (with exceptions)

These transactions will show the asset sold, the number of units, gross proceeds, cost basis (often missing or incorrect), date acquired, date disposed, and gain/loss.

Transactions typically not included:

• Transfers off the exchange
• Certain NFT sales under $600 (subject to reporting thresholds)
• Certain stablecoin sales under $10,000 (subject to reporting thresholds)
• Wrapping / unwrapping
• Most staking and unstaking
• Lending transactions
• Rewards, interest, staking income (usually on 1099-MISC)
• All on-chain activity (DEX trades, DeFi, etc.)

Important note: Just because something doesn’t appear on the 1099-DA does not mean it’s non-taxable. You are still required to report all taxable disposals on your own 8949 as you have in prior years.

I only transferred crypto off the exchange, why is my 1099-DA showing disposals?

When you transfer crypto, you generally pay a gas/network fee. Under IRS rules, those fees are taxable disposals.

The transferred assets are not taxable, but the gas fee is. That’s what you’re seeing.

What do I do if my 1099-DA is straight up WRONG?

Unfortunately, we’re seeing reports of this happening. One person even said their cash buys are showing as sales. While I haven’t personally verified these cases, I’m not shocked errors are surfacing.

Do not ignore it.

Step 1. Calculate your TRUE taxable liability. The number you can actually defend. Load all your data into your crypto tax software (or your model), ensure completeness and accuracy, and generate your report.

Step 2. Contact the exchange and request a corrected 1099-DA. It may feel like trying to wrangle a bull with floss, but showing a good-faith effort matters.

Step 3. File an extension. This buys time for corrections.

Step 4 (Optional). Attach an explanatory memo to your return outlining:

• The error
• Steps taken to correct it
• How your 8949 reflects accurate taxable activity

Will I be audited if my proceeds don't perfectly match my 1099-DA?

Unlikely.

Yes, the IRS has matching systems. But they focus on signal over noise. If:

• You report all taxable crypto activity (including DeFi and non-US exchanges)
• Properly categorize 1099-DA transactions on the correct 8949 checkbox
• Use a defensible methodology

…you are unlikely to face enforcement action over small mismatches.

Historically, with other regulatory rollouts, the IRS has eased into enforcement. They’re more focused on those flat-out not reporting than someone whose numbers are slightly off.

But what about about automated notices like the "please explain" CP2000?

The IRS does have an automated matching system. But as stated here, when mismatches are identified, a tax examiner manually reviews the return. The narrative being pushed that a few cents of variation automatically triggers a notice is complete fear-mongering nonsense.

https://preview.redd.it/666dz1q89okg1.png?2308&format=png&auto=webp&s=79dbfebf2151b13df9adb4ea25174a5ce3c0bc2a

Further, even if minor mismatches do result in notices (which is unlikely), responding is actually quite straightforward.

If you've reported all taxable activity, used a defensible method with a clear record of how you calculated your numbers (like a software), then the response is as easy as a one pager explaining how you populated your 8949 plus your capital gain/loss report showing the trades and the accounts where they occurred. You could remove wallet addresses and just say "DeFi" instead of a wallet address.

ChatGPT could spin up a response and you'd be back to enjoying life in minutes.

Why can't I import my tax form to TurboTax?

Early this tax season, TurboTax quietly removed the ability to import the regular gain/loss CSV produced by tax softwares. TurboTax is updating their flow to allow for a PDF import, but it's unfortunately taking some time. There are workarounds available, but a bit more manual. Hang tight, a solution should be available soon.

What are the biggest mistakes people are making right now?

Easy. There are two:

1. Treating the 1099-DA as the sole source of truth and drastically overpaying by failing to reconcile cost basis as discussed here
2. Ignoring it entirely and either not reporting crypto at all (fraud) or grossly misplacing transactions in the wrong 8949 checkbox

These are easy to avoid.

I want to do the right thing, what should I focus on?

If you’re making a good-faith effort, you don't need to be anxious.

Focus on:

1. Reporting all taxable activity (exchanges, wallets, protocols, etc.)
2. Placing 1099-DA transactions in the correct checkbox on the 8949
3. Ensuring there are no material pricing discrepancies between your 1099-DA and your 8949

That’s it. Everything else is secondary.

While this absolutely can be done manually, your tax software should be prioritizing these things to ensure your reporting is compliant and defendable.

Who should I trust if I want additional help?

Many CPAs and tax professionals are excellent, but not all specialize in crypto or understand the 1099-DA and new tracking/fee rules.

If you seek professional help, make sure they are well-studied in crypto tax.

For anyone needing help, here is a list of vetted tax pros familiar with crypto.

Bottom Line

The fear mongering needs to stop. Most people are trying to do the right thing. At the end of the day, what the IRS cares about is that you report your activity.

Yes, there are some additional hoops to jump through like proper check boxes and ensuring proceeds aren't wildly inconsistent, but if you’ve reported your activity accurately, you should not lose sleep this tax season.

Cheers. Don’t stress.

JustinCPA, Product Lead @ Summ