Form 1099: Filing Mistakes and How to Correct Them

What is Tax Form 1099?

An essential component of your year-end planning is information return filing. These forms come with a particular bent of rules. When not filled out by rights, your clientele can be subject to penalties or other likely fiscal and reporting issues .
data returns forms are broadly used to notify the government and taxpayers about taxable payments you or your business made. The most common types of information returns at year-end are W-2 forms and 1099 forms .
At its most basic, the difference between W-2 and 1099 forms is this :

  • W-2 forms are given to employees of a company
  • 1099 forms are given to contractors working for a company 

What ’ s the dispute between W2 and 1099 ?


once you ’ ve determined that you ’ ve hired an independent contractor, the form 1099 is incredibly important. here are 10 coarse mistakes we see clients make when filing class 1099 .
1. Not filing a form when a form is needed.
The biggest err we see is that taxpayers neglect to file an data return when one is required. There are respective situations that require a form 1099 or other information return to be filed. If you ’ ra not certain whether or not you need to file a 1099 form, you can download our 1099 e-book to learn more .
2. Not filing by the due date.
In general, all data returns are due to the recipient by January 31, 2022. Forms W-2 and 1099-NEC are due to the IRS by January 31, 2022, american samoa well, regardless if you electronically or newspaper charge. For the most part, the remainder of the 1099 forms are due to the IRS by February 28, 2022, if newspaper filing or March 31, 2022, if electronically filing .
The best manner to avoid issues with 1099 file is to start preparing early. Review your seller information before year-end to be sure you have all the Form W-9s and other information required to file these forms .
3. Completing the wrong form.
If paper file, be surely to use the compensate year of the kind. Make certain to prepare the red Copy A to be filed with the IRS. besides, ensure you start with the right Form 1099, ex. 1099-MISC or 1099-INT, etc .
4. Using the wrong box on the form.
When preparing your forms, evening if you have the right human body, be sure to use the proper box on the form. On the Form 1099-MISC, there are several boxes the IRS taxes in different ways :

  • Rent (box 1) may be shown on a 1040 Schedule E
  • Other income (box 3) may be shown on a 1040 Schedule C or other 1040 form
  • The IRS will treat different types of income differently as shown on different boxes. Different types of income may have different tax rates and rules based on the box and form it is placed on.

5. Not reporting a Taxpayer ID Number (TIN) or reporting an incorrect TIN.
Be certain you are receiving and regularly updating the Form W-9 for your vendors so you can be certain you have appropriate information to file information returns at year-end. You can besides go to the IRS web site and run the information through a TIN confirmation to see if what you received from your seller matches the IRS records. Another key thing to watch out for here is using the appropriate name for the TIN received. In some cases, you will receive a Social Security number for a Schedule C occupation but will receive the entities doing clientele as ( assumed name ) appoint rather of their name. When the IRS attempts to match the Social Security number with the assumed name appoint in the system, they will not match because they will be expecting a person ’ s name .
6. Using incorrect information to complete the form.
Double check your records to be sure you are using the allow amounts for the right class and the correct seller. Make sure you are using the seller ’ randomness chastise name and address for the shape. respective accounting systems will track 1099 information for you, but you must set it up correctly .
7. Filing a paper return when electronic filing is required.
The IRS requires a payer to e-file the data reelect forms when the number of forms for a single character of form for the year is more than 250. This is a per-form count, so if you have five 1099-INT forms and 300 1099-MISC forms, you are lone required to e-file the 1099-MISC forms. You can register to e-file forms at hypertext transfer protocol : // There are regulations pending that may reduce this 250 count, but at this item, they have not been issued .
8. Not sending in a Form 1096 transmittal when paper filing.
A form 1096, a transmission human body, is required when newspaper file. One form 1096 is required per type of 1099 filed. This helps the IRS to know if they have received and read all forms attached. This form is not required when you electronically file .
9. Not preparing machine readable forms.
The IRS will machine read these forms. It is important to write legibly and in iniquity ink so the forms can be machine read correctly.

10. Improper formatting of name, address, etc.
Completing a identify or address in the incorrectly format will cause the shape to be misread, as it is read by machines. Be surely to fill out the form in the proper format so it can be processed correctly .
Learn more about the requirements of Form 1099 .


It is highly improbable that you will go through 1099 filing season and not come across one needed correction, but correcting forms is slowly once you understand the process .

Types of 1099 Errors

There are two types of 1099 errors to be corrected. Type 1 entirely requires one shape 1099 to be filed to correct the error. Type 2 requires two 1099 forms to be filed to make the discipline .
Type 1 Errors
Type 1 errors occur when you prepare a mannequin with :

  • The incorrect amount
  • An incorrect code or checkbox
  • An incorrect payee name or address
  • Or, when you filed a form when one should not have been filed

To correct Type 1 errors, file the right form with the right measure, code, checkbox, name or address and check the “ CORRECTED ” box ( by and large located at the lead of the form ). Send the correct shape to the recipient role and prepare the red Copy A to send to the IRS with the human body 1096 transmission if composition filing. For electronic file, you do not need to send in a form 1096, nor should you send in the primitively filed forms with the correction to the IRS .
Type 2 Errors
Type 2 errors occur when you prepare a shape with :

  • The wrong payer information, including the wrong Taxpayer ID Number (TIN)
  • The wrong recipient information, including the wrong TIN
  • Or, when you prepare the wrong form (like a 1099-INT instead of a 1099-DIV)

To correct Type 2 errors, you will need to file two kind 1099s :

  1. The first 1099 will be with the exact same payer and recipient information as the originally filed form, but the amounts on the form will be all zeros and the “CORRECTED” box will be checked. This will remove the originally filed form from the IRS records.
  2. Then, you will need to file a new Form 1099 with the appropriate information as an originally filed form (not a corrected form).

    Send the corrected and new original forms to the recipient and prepare the red Copy A to send to the IRS with the Form 1096 transmittal, if paper filing. A different Form 1096 is required for each type of Form 1099 filed. For electronic filing, you do not need to send in a Form 1096.

Other Items to Note in 1099 Corrections

If the recipient role of the shape has different data in their records, they will likely contact you for an explanation or correction of the Form 1099. occasionally, this remainder in records is due to a check being written from your trust history and not yet deposited in the recipient account. It is important to investigate differences noted from the recipients. What is on those forms will need to be what is reported on their tax return and you don ’ metric ton want to be the cause of faulty information .
An IRS notice is the other chief reason to amend a shape. This by and large relates to a tin that doesn ’ thyroxine match what the IRS has for the recipient name .
just remember—when correcting forms, be sure to verify the type of mistake, so you know if you need to prepare one 1099 or two to complete the correction.

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Category : Finance

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