Kraken Taxes 2026: Does Kraken Report to the IRS? (1099-DA Guide)

Kraken is one of the oldest and most trusted US cryptocurrency exchanges, and like all US brokers it now reports your activity to the IRS. The 2026 filing season brought major changes with the new Form 1099-DA. This guide explains exactly what Kraken reports, which forms you receive, the cost basis trap that can make you overpay, how to download your documents, and how to file correctly.

Does Kraken report to the IRS in 2026?

Yes. Kraken is a regulated US exchange and shares user data directly with the IRS and your state tax agency. As of the 2026 filing season:

What is Form 1099-DA and when does Kraken issue it?

Form 1099-DA is the new digital-asset broker reporting form. Here is the timeline:

• 2025 tax year (forms issued 2026): Kraken reports gross proceeds only — the total you received from sales, before cost basis
• 2026 tax year onward (forms issued 2027): Kraken also reports cost basis, acquisition date, gains/losses, and holding period — but only for assets acquired and held on Kraken from January 1, 2026
• Delivery: Officially due by February 17, 2026, but Kraken filed an extension and estimated forms ready by mid-March 2026
• Where to find it: Kraken's website only (not the app), under Documents → Tax Statements

The cost basis trap (why you might overpay)

This is the single most important thing for Kraken users to understand. For the 2025 tax year, Kraken reports your sale proceeds but not your cost basis for most transactions. If box 1g of your 1099-DA says "unknown" or shows $0, cost basis was not reported.

The IRS treats blank cost basis as $0, meaning you pay tax on your full proceeds instead of just your gains. You are responsible for supplying the correct cost basis on Form 8949.

Covered vs non-covered assets on Kraken

• Non-covered (2025 and earlier, or transferred in): Cost basis blank or "unknown." You must supply it. Every 2025 crypto sale is non-covered.
• Covered (acquired and held on Kraken from Jan 1, 2026): Full cost basis reported on the 2027 form. Example: buy 2 SOL on Kraken in March 2026 for $200, sell in November 2026 for $280 — the 2027 form shows both proceeds ($280) and basis ($200).

How is Kraken crypto taxed in 2026?

Capital gains (disposals)

Selling, trading, or converting crypto on Kraken is a taxable disposal:

• Short-term (held 1 year or less): ordinary income rates 10–37%
• Long-term (held more than 1 year): 0%, 15%, or 20%
• Plus 3.8% NIIT for high earners, plus state tax (0% in FL/TX/WY, up to 13.3% in CA)

Ordinary income (earnings)

• Staking rewards — ordinary income at fair market value when received (per IRS Rev. Rul. 2023-14)
• Referral bonuses — ordinary income
• Earn/interest products — ordinary income (1099-INT if $10+)

How to do your Kraken taxes in 2026 (step by step)

1. Download your forms from Kraken's website (not app): Documents → Tax Statements. Get your 1099-DA, 1099-MISC, and 1099-INT if issued.
2. Download the CSV reports from the Tax Center: Income Report, Gain/Loss Report, and full transaction history.
3. Reconcile cost basis for any crypto transferred in or bought before 2026. Find your original purchase price and fees.
4. Use Kraken's proceeds figure on your return (the IRS has that number), then correct the cost basis section.
5. Track per platform. You must use Kraken cost basis for Kraken sales — you cannot mix it with Coinbase basis for the same asset.
6. Separate income — staking and rewards go to ordinary income, not capital gains.
7. Report disposals on Form 8949 and Schedule D.
8. Report income on Schedule 1 (or Schedule C for business).
9. Answer the digital-asset question on Form 1040 truthfully.

Worked example: Kraken long-term Bitcoin sale

Scenario: You bought 0.5 BTC on Kraken in 2024 for $22,000. You sold it in March 2026 for $46,000. Your annual income is $85,000. You live in Florida.

1. Proceeds (on 1099-DA): $46,000
2. Cost basis: $22,000
3. Gain: $46,000 − $22,000 = $24,000
4. Holding period: 2 years — long-term
5. Federal LTCG rate at $85k income: 15%
6. Federal tax: $24,000 × 15% = $3,600
7. Florida state tax: $0
8. Total tax: $3,600

If you had filed using only the 1099-DA with no cost basis, the IRS would have assumed $46,000 in gain and taxed roughly $6,900 — almost double. Reporting cost basis correctly saves you $3,300.

Worked example: Kraken staking rewards

Scenario: You earned $720 in staking rewards on Kraken in 2026. Your other income is $75,000.

1. Kraken issues a 1099-MISC (rewards exceed $600)
2. Staking income: $720 ordinary income at fair market value when received
3. Federal rate at $75k income: 22%
4. Tax on rewards: $720 × 22% = $158
5. Cost basis in earned crypto: $720 (sets future capital gain baseline)
6. Report on Schedule 1 "Other Income"

The Kraken + CoinTracker partnership

Kraken partnered with CoinTracker to power its US Tax Center. This gives you optional integrated tax tools, while still allowing you to use your own records or another tax tool like Koinly. CoinTracker helps Kraken calculate the income, gains, and losses used for the 1099 forms. If transactions are flagged for missing cost basis, a warning banner shows the estimated impact, and you can fix them via the automated CoinTracker workflow or by manually editing on Kraken Pro (History → Main → Ledger).

Common Kraken tax mistakes

• Filing on 1099-DA proceeds alone. Without supplying cost basis, you drastically overpay.
• Ignoring transferred-in crypto. Kraken has no visibility into what you bought elsewhere — you must supply that basis.
• Mixing cost basis across exchanges. Per-wallet rules require Kraken basis for Kraken sales.
• Reporting staking only when sold. Staking is income when received, not when sold.
• Missing transactions from Kraken's two-year API limit. Older history may not import into tax software.
• Assuming stablecoins are tax-free. Every disposal, including USDC, is a taxable event.
• Backup withholding surprise. 24% backup withholding can apply if you have not verified your tax status (W-9) with Kraken.
• Answering the 1040 digital-asset question "No" when you had activity — a compliance red flag.

Frequently asked questions about Kraken taxes

Does Kraken report to the IRS?

Yes. Kraken is a regulated US exchange and reports user activity to the IRS via Form 1099-DA (sales), Form 1099-MISC (income over $600), and Form 1099-INT (interest over $10). It was also court-ordered in 2023 to share data on users who traded $20,000+ between 2016 and 2020.

Does Kraken send tax forms?

Yes. Kraken issues Form 1099-DA if you sold or traded crypto, Form 1099-MISC if you earned $600 or more in staking or rewards, and Form 1099-INT if you earned $10 or more in interest. Forms are available on Kraken's website under Documents, not in the app. Even without a form, you must still report all taxable activity.

Why does my Kraken 1099-DA show no cost basis?

For the 2025 tax year, Kraken is only required to report gross proceeds, not cost basis. Every 2025 sale is a non-covered asset. If box 1g says "unknown" or shows $0, you must supply the correct cost basis on Form 8949 yourself, or the IRS will assume zero basis and tax your full proceeds.

Are Kraken staking rewards taxable?

Yes. Staking rewards are ordinary income at fair market value when received, per IRS Revenue Ruling 2023-14. Kraken issues a 1099-MISC if your rewards exceed $600 in a year. Rewards under $600 are still taxable and must be reported on Schedule 1.

When does Kraken send 1099 forms?

1099 forms were officially due by February 17, 2026, but Kraken filed an extension and estimated forms would be ready by mid-March 2026. The IRS has said it will not penalize exchanges that issue 1099-DA forms after the deadline due to the new form's complexity. If you need more time, you can file an extension until October 15.

How do I avoid overpaying tax on Kraken crypto?

Download your full transaction history, reconcile the original cost basis for any transferred-in or pre-2026 crypto, and report accurate basis on Form 8949. Use Kraken's proceeds figure (the IRS has it) but correct the cost basis section. Without this, the IRS taxes your full proceeds instead of just your gain.

Does Kraken report DeFi transactions?

No. The new broker regulations apply only to the Kraken exchange (Kraken.com, Kraken Pro). Activity on Kraken's DeFi apps (Kraken Wallet, Ink) is NOT reported on your 1099-DA. You are responsible for tracking and self-reporting all DeFi taxable events.

What happens if I don't report Kraken on my taxes?

The IRS receives copies of your Kraken 1099 forms. If your return does not match, automated systems flag the mismatch and the IRS can send notices proposing additional tax, interest, and penalties. The IRS has previously used Kraken data to send warning letters (6173/6174) to crypto investors.

Can I file without my Kraken 1099-DA?

It is not advisable. Without the 1099-DA you cannot correctly check the boxes on Form 8949 for covered vs non-covered assets. If forms are delayed, a safer option is to file for an extension until October 15, by which time the forms should be available.

Does Kraken issue a 1099-B or 1099-K?

No. Kraken does not issue Form 1099-B or Form 1099-K. Starting with the 2025 tax year, the relevant form for crypto disposals is the new Form 1099-DA, which replaces the older broker forms for digital assets.

Bottom line for Kraken users

Kraken reports your sales, income, and interest to the IRS, and the agency receives an identical copy of every form. The biggest risk in 2026 is not under-reporting — it is overpaying because the 1099-DA shows gross proceeds with no cost basis for crypto you transferred in or bought before 2026. Download your full transaction history and CSV reports, reconcile your real cost basis, use Kraken's proceeds figure but correct the basis section on Form 8949, and track cost basis per platform. Wait for all forms (or file an extension), separate staking income from capital gains, and always answer the Form 1040 digital-asset question truthfully. Use the calculator below for a quick estimate of your federal and state tax on Kraken gains in 2026 — and consult a CPA for complex transfer or DeFi situations.