In brief
That is the problem to solve first.
What changed for crypto tax reporting?
Two changes are colliding.
First, taxpayers who sold digital assets through brokers may receive Form 1099-DA. The IRS says that many 2025 statements will not include basis information, which means the taxpayer may still need to calculate basis to determine gain or loss.
Second, basis identification rules now operate on a wallet-by-wallet or account-by-account framework. IRS guidance under Rev. Proc. 2024-28 explains the transition from universal or multi-wallet allocation to wallet/account allocation.
That is not a cosmetic accounting change.
If you bought the same asset at different prices in different places, the wallet or account holding the units can now matter directly to which basis is available for a disposal.
Why Koinly had to build a migration workflow
Koinly's wallet-based cost tracking guidance makes an important point: simply flipping a setting on an old account can recalculate prior years.
So Koinly uses a migration process intended to preserve historical treatment while transitioning into the newer wallet-based approach.
That is exactly the sort of setting I would verify before filing rather than trusting because the dashboard looks finished.
The 1099-DA trap
A tax form from an exchange feels authoritative.
That can create false comfort.
The IRS says many 2025 Forms 1099-DA will not include basis. If assets were transferred into an exchange from another wallet, the broker may know the sale proceeds but not the full acquisition history.
So this can happen:
| What the broker knows | What may still be missing |
|---|---|
| Sale date | Original acquisition date |
| Sale proceeds | Original cost basis |
| Asset sold | Transfer history from another wallet |
| Transaction on its platform | Off-platform acquisition details |
That is why a 1099-DA should be reconciled against your own records, not treated as a complete transaction history.
The seven checks I would do before generating the final report
Do these before staring at the tax number.
- Every exchange is imported. Not just the one where you sold.
- Every self-custody wallet is imported. Missing wallets create fake disposals, missing basis and unmatched deposits.
- Transfers between your own wallets are matched. A transfer is not automatically a taxable sale.
- Missing-cost-basis warnings are reviewed. Do not dismiss them because the total tax result "looks reasonable."
- Wallet/account migration settings are verified. Especially if the account has several years of history.
- 1099-DA data is reconciled against the ledger. Check whether basis is present and whether the transactions match.
- Form 8949 is reviewed before filing. The software output is the end of the workflow, not the beginning.
Where Koinly earns its keep
For a simple account with ten trades on one exchange, a full crypto-tax platform may be overkill.
The value changes quickly when you have:
- several exchanges;
- self-custody wallets;
- DeFi;
- bridges;
- staking or protocol activity;
- years of transaction history.
At that point the hard part is reconciliation.
Koinly's value proposition is not "we know your taxes better than you do." It is "we can turn fragmented transaction history into one ledger you can inspect."
That is a much more defensible reason to use it.
Before you click anything
Koinly should not be the first step if your source data is obviously incomplete.
Collect the wallets and exchanges first.
Then use the software to reconcile them.
If your history is fragmented enough that manual reconstruction is becoming the larger risk, that is the moment a tax platform starts making economic sense.
Frequently asked questions
Is October 15, 2026 the crypto tax deadline for everyone?
No. It is generally the extended federal filing deadline for taxpayers who obtained a valid extension for their 2025 U.S. return. Individual circumstances can differ.
Does Form 1099-DA include cost basis?
Not always. The IRS says many forms for 2025 transactions will not include basis, so taxpayers may still need to calculate and substantiate it.
Why does wallet-based cost tracking matter?
Because basis identification now depends on the wallet or account holding the digital-asset units rather than treating all holdings as one universal pool.
Can Koinly file my taxes correctly if wallets are missing?
No software can accurately reconcile transactions it does not have. Missing wallets, exchanges or transfers should be fixed before relying on the final report.
Original Jepeta evidence
- source audit — Jepeta compared the cited Koinly documentation with the workflow, benefits and limits described in this article. This is a documentation audit and editorial analysis, not a hands-on product test. · observed Oct 7, 2026
Sources
- IRS: Reminders for taxpayers about digital assets · primary · verified Oct 7, 2026
- IRS: Rev. Proc. 2024-28 — basis allocation to wallets/accounts · primary · verified Oct 7, 2026
- IRS: Digital assets filing guidance · primary · verified Oct 7, 2026
- Koinly: Migrating to wallet-based cost tracking · primary · verified Oct 7, 2026
- Koinly: How to report crypto on Form 8949 and Schedule D · primary · verified Oct 7, 2026
- IRS: Get an extension to file your tax return · primary · verified Oct 7, 2026