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The average cryptocurrency user could overpay their taxes by as much as $14,500 for 2025, cryptocurrency tax software provider Summ says.
According to the firm, $435 million in inflated capital gains compared to $46 million in actual gains after analyzing data from 30,000 U.S. cryptocurrency users with average trading activity.
Extrapolating the data across other transaction types and the 46 million U.S. cryptocurrency users, the inflated capital gains exceed $600 billion, Summ said.
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Summ attributed the discrepancy to reporting limitations in the IRS’s new Form 1099-DA, which requires users to report gross proceeds from cryptocurrency transactions.
The form for the 2025 tax year requires users to fill in the cost basis for all their transactions. This creates problems for cryptocurrency users who typically use multiple platforms, Summ said, adding that cost basis information is not transmitted across platforms.
The average cryptocurrency user transacted across four platforms, including wallets and exchanges, Summ found. Of the four, only one is a reporting platform that issues a 1099-DA, the company said, adding that 57% of transactions happened on nonreporting platforms.
Summ said the burden of proof under the current system lies on users to show why calculated gains may differ from the 1099-DA, which can be cumbersome or impractical for users of platforms that do not maintain records.
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Meanwhile, Summ Product Lead Justin Zanardi told Benzinga in an emailed statement that most cryptocurrency users believe they only need to file the 1099-DA, unaware that they must calculate their cost basis.
“Crypto brokers often don’t have cost basis information for assets that were acquired off-platform and transferred in,” Zanardi said. “When that happens, the 1099-DA reports a $0 or ‘unknown’ basis. CPAs and tax software then treat the entire proceeds amount as taxable gain, and that can mean thousands of dollars in overpayment on phantom gains.”
Zanardi urged cryptocurrency users having difficulty calculating their cost basis to request an extension, buying time beyond the looming Wednesday tax filing deadline.
The extension is free to file and would give users till Oct. 15, Zanardi said.
Zanardi’s comments align with a Coinbase (NASDAQ:COIN) and CoinTracker survey last month that most cryptocurrency users are unaware of new reporting rules and quite a number still struggle with the basics.
With cryptocurrency tax reporting becoming more complex, many investors turn to professional guidance. Services like AdviserMatch connect users with financial advisors who can help calculate cost basis, navigate new IRS forms, and ensure taxes are handled accurately.
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