Remittances as the Primary Signal of Diaspora Investment in 2025

(UNITED STATES) — Starting in tax year 2026 (returns filed in 2027), many Indian-origin U.S. taxpayers who move money internationally will see a major shift in how crypto-based transfers and investments are reported to the IRS: Form 1099-DA reporting by U.S. digital asset brokers will be in play, which can increase IRS matching and audit risk for unreported gains.

This matters because cross-border money movement is no longer limited to bank wires. Many families now use fintech apps, exchanges, and crypto rails for remittances and for deploying capital abroad.

If you are a U.S. tax resident—whether on an H-1B, with a green card, or meeting the Substantial Presence Test—you generally report worldwide income, including crypto gains and many foreign accounts. (See IRS Publication 519, “U.S. Tax Guide for Aliens,” at irs.gov/pub/irs-pdf/p519.pdf.)

What changed, and when it starts

Change: U.S. “digital asset brokers” will begin issuing information returns that report certain digital asset sales and exchanges to taxpayers and the IRS on Form 1099-DA.

Effective: The change affects transactions during tax year 2026, which are reported on 2026 returns filed in 2027. This is part of the broader IRS digital asset reporting framework and aligns with the IRS’s longstanding approach for stock and securities reporting.

You can verify the IRS’s current digital asset guidance at irs.gov, under the “Digital assets” section (IRS’s digital assets hub).

Before/After: What reporting looked like vs. tax year 2026

The core practical change is third‑party reporting. When the IRS receives a 1099 that doesn’t match your return, notices tend to follow.

IRS forms to know: Form 8949, Schedule D (Form 1040), and any 1099 series forms you receive. Capital asset rules are discussed in IRS Publication 544 (Sales and Other Dispositions of Assets) and basis rules in IRS Publication 551 (Basis of Assets).

Both are available via irs.gov/forms-pubs.

Who is affected (immigration and residency basics)

This change hits a wide group, but it is most common among Indian-origin households who are both globally connected and active investors.

You are likely affected if you are any of the following in 2026:

• A green card holder (generally a U.S. tax resident under the Green Card Test).
• A worker on H-1B, L-1, O-1, or TN who meets the Substantial Presence Test.
• A long-term resident who moved to the U.S. years ago but still sends remittances and builds capital abroad.
• A U.S. taxpayer using exchanges or apps to buy crypto, convert to another asset, and then remit proceeds.

If you are in F-1 or J-1 student status, you may be a nonresident alien for some years due to the exempt-individual rules. Residency is fact-specific. Publication 519 is the starting point.

Practical tax impact: remittances and “conversion steps” become visible

Many remittances have multiple steps. The tax impact often appears in the step people ignore.

Example 1: Crypto-funded remittance to family in India

• You buy a digital asset for $5,000.
• It rises to $6,200.
• You sell it to dollars, then send the dollars as a remittance.

The remittance is typically not taxable. But the sale can create a $1,200 capital gain. That gain goes on Form 8949/Schedule D. With 1099‑DA reporting, the IRS is more likely to see the sale.

Example 2: Moving capital abroad for a home purchase

A common pattern is building a down payment for housing in India, Dubai, or elsewhere.

• You sell digital assets to fund a wire to an overseas account.
• The overseas account later pays a developer or seller.

Again, the tax event is usually the sale/exchange in the U.S. tax system, not the wire itself.

Transition rules and “grandfather” realities to plan around

Most taxpayers won’t get a free pass on older holdings. The key transition issue is records.

• If you acquired digital assets years ago, you still need purchase dates, cost basis, and fees.
• Brokers may report some information, but gaps can remain for transfers between wallets or exchanges.
• If you cannot substantiate basis, you risk paying tax as if your basis were $0, depending on facts and documentation.

Keep exchange statements, wallet logs, and bank records that tie fiat deposits to purchases. Publication 551 explains basis documentation concepts.

Don’t ignore foreign reporting: FBAR and FATCA can apply even without “investing abroad”

Indian-origin families often keep accounts in India for parents, property expenses, or legacy deposits. Separate from any 1099‑DA issue, you may have U.S. reporting duties for foreign accounts.

FBAR is filed online with FinCEN, not with your tax return. The IRS explains these rules on its international taxpayers portal: irs.gov/individuals/international-taxpayers.

Recommended actions and timeline (tax year 2026 planning)

In 2026 (now):

• Treat every crypto-to-cash step used for remittances as a potential taxable sale.
• Export trade history from each exchange at least quarterly.
• Track basis and holding period for each lot you might sell.

Early 2027 (before filing your 2026 return):

• Reconcile Form 1099‑DA amounts to your own records.
• Report gains and losses on Form 8949 and Schedule D.
• Review whether you must file FBAR (FinCEN 114) and Form 8938 for overseas accounts holding remittance balances or property funds.

By filing season 2027:

• File your Form 1040 on time, or file an extension by the April deadline.
• If you have complex cross-border facts—dual-status, treaty positions, foreign entities, or large transfers—get professional help early. Those cases often require extra forms and careful disclosures.