As more and more individuals engage in crypto transactions, the rules put forth by the IRS are becoming more strict too. The latest introduction to tax regulations includes Form 1099-DA which deals with how digital assets should be reported when filing crypto taxes. Without a crypto accountant in NYC by your side, staying updated on the latest rules is not an easy task. Crypto accountants engage in crypto transaction reconciliation and maintain accurate records of all crypto transactions while staying compliant with the latest crypto laws.
What are Considered as Digital Assets for Form 1099-DA?
Before understanding what Form 1099-DA is, learning what qualifies as a digital asset in the eyes of the IRS is important. The IRS defines digital assets as any digital representation of value recorded on a cryptographically secure, distributed ledger like blockchain or similar technology. This means that digital assets are considered property rather than currency for tax purposes. Cryptocurrencies, stablecoins, non-fungible tokens (NFTs), and tokenized assets are the most common types of digital assets.
If you have engaged in buying, selling, exchanging, or earning digital assets, the IRS considers these taxable events.
Accurate crypto bookkeeping is required to report digital asset transactions to the IRS. Most crypto traders hire a cryptocurrency accountant nyc to avoid unnecessary penalties during the tax season.
The Latest on Form 1099-DA
Form 1099-DA (Digital Asset Proceeds From Broker Transactions) has been specifically created to report digital asset transactions. The final version of this tax filing form was released in January 2025, while the first version was released in April 2024. As such, crypto bookkeepers in New York make sure that your 2025 crypto trades performed via digital asset brokers are reported to the IRS. This form is applicable for digital asset brokers only, and it is the broker who has to file this information, not the customer.
The reason behind Form 1099-DA being added to the crypto bookkeeping process is to standardize how brokers report digital asset transactions. Accordingly, all digital asset accounting services in New York will be reporting the cost basis for digital assets acquired on or after January 1, 2025.
Reasons to Hire a Crypto Bookkeeper Before Tax Season
If you are a crypto trader or your business deals with a large number of crypto transactions on a daily basis, better not underestimate how time-consuming the tax reporting process is.
Every single transaction should be recorded well ahead so that your crypto tax accountant can devise the best strategy for filing taxes. A cryptocurrency accountant nyc can help you stay compliant since they are updated on the latest rules and regulations put forth by the IRS for digital asset accounting in your region.
Further, crypto bookkeeping services from a crypto accounting firm in NYC also ensure that your crypto transactions are properly tracked and categorized. With IRS scrutiny increasing, the best way to avoid errors that could trigger an audit is transaction reconciliation.
One of the biggest challenges in digital asset accounting is determining the cost basis of each crypto transaction. Since the IRS applies capital gains tax based on whether a trade is short-term or long-term, proper tracking of acquisition prices and dates is needed.
In addition, if you have had losses on some of your crypto investments, a crypto bookkeeper can help you implement tax-loss harvesting strategies. This involves selling assets at a loss to offset gains, reducing your overall taxable income.
Well-documented records are essential if you find yourself preparing for an audit or even for seasonal tax filing. A cryptocurrency accountant nyc ensures that your tax filings are audit-proof by maintaining detailed transaction logs that are compliant with the latest regulations.
