Most crypto investors aren’t trying to avoid the IRS. They just don’t know the rules. That’s the central finding 2026 Cryptocurrency Tax Preparation Reporta new survey of 3,000 US crypto investors conducted by CoinTracker and Coinbase. The data show significant divergence. Although 65% of respondents had already reported cryptocurrencies for tax purposes, more than half were unable to accurately identify the underlying taxable event.
Most investors know that cryptocurrencies are taxed, but they don’t know when they will be taxed.
74% of respondents acknowledge that their cryptocurrency activities are taxable in some way. However, only 49% correctly recognized that tax liability arises at the point of sale. Capital gains (the profits you make when you sell your crypto assets for more than you paid for them) are taxable the moment the sale occurs, regardless of whether your broker submits the form or not.
22% of respondents believe that transferring cryptocurrencies between their wallet and another account will trigger a tax event. it’s not. Under the current system, moving your assets from one wallet to another is not taxable. IRS guidance.
61% of investors have never heard of the new IRS Form 1099-DA
For the first time, centralized brokers are required to report their US customers’ cryptocurrency sales to the IRS. Form 1099-DA For the 2025 tax year. The IRS currently receives matching records of most cryptocurrency retail activity before a single taxpayer files a return. However, 61% of survey respondents said they were unaware of these new reporting rules.
This is of practical importance. For example, Sarah sold $20,000 worth of Ethereum on a centralized exchange in 2025. Her broker issued a 1099-DA and sent a copy to the IRS. If Sarah’s tax return doesn’t reflect that sale, the IRS already has data showing the discrepancy. Her final tax liability will depend on her expense basis and holding period, but her risk of receiving a notice is much higher than before.
What most investors are missing is cost-based tracking
The cost basis is the initial amount paid for the crypto asset. This is used to calculate the taxable gain or loss at the point of sale. The survey found that investors use an average of 2.5 wallets or exchanges, and 83% hold at least some of their assets in self-custodial wallets. However, only 35% of companies reported accurately aligning cost standards across platforms.
The report also found that 76% of respondents were aware that cost base adjustments might be necessary, but only 35% actually made them. Additionally, 41% said they knew about cost basis adjustments but did not implement them, and 16% said they did not know what cost basis adjustments meant. If cost base records are incomplete, investors may overestimate or unknowingly underreport profits.
Only 8% of investors use crypto-specific tax tools
78% of respondents rely on popular tax software and 52% use traditional accountants. Only 8% use cryptocurrency-specific reconciliation tools designed to automatically track cost metrics across multiple wallets and exchanges.
That gap may be narrowing. Interestingly, 47% of respondents said they would use AI to calculate taxable income, capital gains, and cost basis. 30% said they would be comfortable leaving their entire tax process to AI. As multi-wallet tracking becomes more complex, the demand for AI automation is likely to grow further.
Disclaimer: This post is for informational purposes only and is not intended as tax advice. Please consult a tax professional for tax advice.
