The Crypto Checkbox Grows Up: What Form 1099-DA Means for Americans Abroad

For a few years now, the only sign that the IRS cared about your crypto was a single question near the top of the Form 1040, the one asking whether you received, sold, or exchanged a digital asset. Tick yes or no, and move on. That question has been on the return since 2019 (it started life buried on Schedule 1, then got promoted to the front page in 2020), and for a long time it was the whole conversation. You told the IRS. The IRS mostly took your word for it.

That era is ending. Starting with the 2025 tax year, the honor system is giving way to paperwork. If you hold crypto on a major exchange, some of that paperwork is about to land in your mailbox.

What's actually changing

The new arrival is Form 1099-DA, “Digital Asset Proceeds From Broker Transactions.” Under final regulations Treasury and the IRS issued in 2024, custodial brokers (the platforms like Coinbase and Kraken that hold your assets for you) now have to report your crypto sales directly to the IRS, the same way your bank reports interest or your brokerage reports stock sales.

The rollout is staggered. For sales in 2025, brokers report gross proceeds, and you'll see the first 1099-DA forms in early 2026. For sales from 2026 onward, brokers also start reporting your cost basis, which is the number that actually determines your gain or loss. Decentralized and non-custodial platforms aren't covered yet; the IRS has said it will deal with those separately.

One thing to keep in mind: the tax treatment of your crypto hasn't changed at all. Gains were always taxable. What's changed is that the IRS will now have its own copy of the numbers. When then-Commissioner Danny Werfel announced the rules, he was direct about the goal:

“We need to make sure digital assets are not used to hide taxable income, and these final regulations will improve detection of noncompliance in the high-risk space of digital assets. Our research and experience demonstrate that third-party reporting improves compliance.”

Translated: the checkbox told them you might have something. The 1099-DA tells them what.

Why this lands differently when you live in Germany

A US passport means you file US taxes on your worldwide income, crypto included, no matter how many years it's been since you've seen an American zip code. So a 1099-DA from a US exchange will follow you to Frankfurt or Freiburg without blinking.

There's a wrinkle for those of us in Germany. The German tax rules differ significantly from the US rules, and some activities may not trigger taxation that are, however, taxable to the US. A coin you sold completely tax-free on your German return can still be a fully taxable capital gain on your US return. Now that the IRS is receiving broker data directly, that mismatch is much harder to let slide.

Two more things to know: the Foreign Earned Income Exclusion doesn't help here, since it covers earned income and not investment gains. And if you're trading on a non-US exchange, no 1099-DA shows up, but the obligation to report the income is exactly the same.

The bottom line

If you hold crypto and you're keeping up with your US filings, this is more of an administrative shift than a reason to worry. The income was always reportable, and now there's a form to match. The real risk sits with anyone whose past returns don't line up with the data brokers are about to start sending in, or anyone relying on Germany's tax-free treatment without accounting for the US side.

If your crypto activity spans a US exchange, a German one, or both, it's worth talking through before the forms start arriving. Untangling basis, holding periods, and the US–German mismatch is exactly the kind of conversation we have regularly, and it's a lot calmer to have it now than in April.

This post is intended for general informational purposes and does not constitute tax advice. Please consult a qualified tax professional (like us!) regarding your specific situation.