Bitcoin Boom: How to Stay Tax-Smart Before 2025

Bitcoin is hitting new highs, but crypto investors should keep an eye on something else: taxes. Starting in 2026, brokers will report crypto sales on Form 1099-DA, listing gross proceeds from 2025. By 2027, they'll include your original purchase price, known as the "basis. " This price is crucial because without proof, the IRS might assume it's zero, boosting your gains. "People often forget about tax implications when prices surge, " says Matt Metras, an enrolled agent specializing in digital assets.

The IRS has been updating rules for digital asset brokers. Until now, investors could use the "universal method" to track basis across multiple wallets. But this changes in 2025. Reporting will shift to the wallet level, requiring investors to establish a "reasonable allocation" of basis by January 1, 2025. This means providing your broker with detailed information to avoid future tax headaches. The IRS is stepping up enforcement on digital assets. To stay ahead, investors need to start planning now. Understanding these new rules can help you avoid unwanted tax surprises.

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