If your 1099-DA shows incorrect crypto gains, missing cost basis, or transaction errors, you may need to submit a dispute letter before filing your taxes. This IRS-ready 1099-DA dispute letter template helps you formally request corrections from your exchange and prevent reporting inaccurate taxable income.
Run the Full 1099-DA Crypto Mismatch Calculator to verify your reporting before submitting a dispute.5-Step Dispute Process (Quick Version)1. Identify the incorrect totals on your 1099-DA (proceeds or transaction count)
2. Gather evidence from your exchange transaction history
3. Draft an explanation of the discrepancy and list missing cost basis or transfers
4. Send the dispute letter and supporting documents to your exchange requesting an amended 1099-DA
5. Keep records of your correspondence and response
🗚 How to Use the Dispute Letter TemplateIf your exchange sends an incorrect Form 1099-DA, follow these steps:• Compare the reported proceeds to your transaction history to spot discrepancies.
• Calculate your true cost basis using crypto tax software.
• Review transfer activity and wallet transactions to ensure they are not misreported as sales.
• Draft a dispute letter using this template to request a corrected 1099-DA.Recommended Tools to Prepare Your Evidence
Koinly — Best for Multi-Exchange & Wallet Users
👉 Complete manual reconciliation guide for fixing mismatch issues before filing
👉 Reconcile your full crypto transaction history with Koinly
👉 Fix missing cost basis and generate accurate tax reports with CoinLedger
🔹 SECTION 1 — What Is Form 1099-DA?What Is IRS Form 1099-DA?Form 1099-DA (Digital Asset Proceeds From Broker Transactions) is a new IRS reporting requirement for cryptocurrency transactions. Beginning with the 2025 tax year, certain crypto exchanges must report digital asset proceeds to the IRS and to taxpayers.The key detail: many exchanges report gross proceeds, not your true gain or loss.That means your 1099-DA may not perfectly match your wallet activity — especially if:• You transferred assets between exchanges
• You used self-custody wallets
• You have missing cost basis data
• You traded on multiple platformsThis calculator estimates your potential mismatch risk before filing.
Feature ComparisonBest For
Koinly → Active traders using multiple exchanges and wallets
CoinLedger → Simpler portfolios and moderate transaction volumeExchange & Wallet Import
Koinly → Automatic syncing across exchanges and wallets
CoinLedger → Automatic exchange syncing with guided wallet importCost Basis Tracking
Koinly → Advanced tracking across complex transaction histories
CoinLedger → Standard cost basis calculation1099-DA Support
Both platforms support digital asset reporting and capital gains calculation.Audit-Ready Reports
Koinly → Detailed capital gains & transaction breakdown
CoinLedger → Clean export-ready tax summariesWhich Should You Choose?Choose Koinly if you:
• Traded on multiple exchanges
• Transferred assets between wallets
• Have high transaction volume
• Need detailed reconciliationChoose CoinLedger if you:
• Have a moderate portfolio
• Want simplified reporting
• Prefer guided setup
🔹 SECTION 2 — Why 1099-DA Numbers May Not Match Your WalletWhy Your 1099-DA May Not Match Your Actual Crypto ActivityMany traders assume their 1099-DA reflects their exact taxable gain.That is not always the case.Here’s why discrepancies happen:1️⃣ Missing Cost BasisIf crypto was transferred between exchanges or from a private wallet, the receiving exchange may not have original purchase data.
Result: The IRS may see full proceeds without cost basis.2️⃣ Wallet Transfers Mistaken as SalesInternal transfers between exchanges or wallets can sometimes appear as disposals if cost basis tracking is incomplete.If one platform reports a transaction but does not reflect the original acquisition history, it may look like a taxable event — even when it was simply a transfer.3️⃣ Multi-Exchange TradingIf you trade across multiple exchanges, each platform only sees part of your transaction history.One exchange may report proceeds without knowing the original purchase price from another exchange. This can create reporting gaps between your real gain and what appears on Form 1099-DA.4️⃣ DeFi & Self-Custody ActivityDecentralized exchanges, staking rewards, NFT trades, and wallet-to-wallet activity may not integrate cleanly with centralized exchange reporting.That means your 1099-DA might only show a portion of your total activity.5️⃣ Incomplete Historical DataIf you began trading years ago and no longer have full transaction records, cost basis reconstruction becomes difficult — increasing the likelihood of mismatch.Why This MattersWhen IRS-reported proceeds do not align with your internal records, it can:• Overstate taxable gains
• Trigger IRS clarification notices
• Create reconciliation stress during filing
• Increase audit risk if not properly documentedThis is why proactive reconciliation matters before filing.
Frequently Asked Questions About 1099-DA Mismatch and ReconciliationWhat is Form 1099-DA?
Form 1099-DA (Digital Asset Proceeds From Broker Transactions) is an IRS reporting form used to report cryptocurrency transaction proceeds from certain exchanges and brokers. It is part of updated digital asset reporting requirements beginning with the 2025 tax year.Unlike older reporting methods, 1099-DA focuses on digital asset proceeds and may not always reflect full cost basis history.Is it normal for my 1099-DA to not match my exchange or wallet totals?Yes. This is extremely common.Most exchanges report only the proceeds they processed — not your full transaction history across wallets, platforms, or transfers.This means your 1099-DA may:• show higher proceeds than your actual gains
• show missing cost basis
• exclude transfers between exchanges
• exclude original purchase historyThis does NOT automatically mean you owe more tax.Why does my 1099-DA show higher proceeds than my actual profit?1099-DA reports proceeds — not profit.If cost basis is missing, the IRS only sees the sale amount, not what you originally paid.Example:You bought Bitcoin for $10,000
You sold for $12,000If cost basis is missing, IRS may see only $12,000 — not the $2,000 gain.Reconciliation restores the original cost basis.Can incorrect 1099-DA data trigger IRS notices?Yes — but reconciliation reduces this risk significantly.IRS notices typically happen when reported proceeds do not match your tax return.Reconciliation ensures:• correct cost basis
• correct gain calculation
• correct transaction matchingThis prevents reporting inconsistencies.Do I need reconciliation software for 1099-DA?If you used:• multiple exchanges
• transferred crypto between wallets
• DeFi platforms
• self-custody wallets
• staking or NFT transactionsThen reconciliation software helps rebuild your full transaction history accurately.Does a mismatch mean I did something wrong?No.Most mismatches happen due to incomplete cost basis tracking across platforms — not user error.This is a reporting limitation, not a compliance violation.What should I do if my 1099-DA totals don’t match my records?You should compare:• reported proceeds
• cost basis
• wallet transfers
• exchange exportsIf differences exist, reconciliation software can rebuild and verify your transaction history before filing.Is this calculator official IRS advice?No.This calculator is an educational risk estimation tool.It helps identify potential mismatch risk before filing but does not replace professional tax advice.Always verify your exchange exports and consult a qualified tax professional if needed.