If you filed a Form 1099 or W-2 with errors, then it’s critical that you file a correction ASAP to avoid additional fines and other penalties from the IRS.
Step 1: Recognize Your Mistakes
The most common errors include the following:
- Filing the wrong form type
- Reporting the wrong amount
- Reporting the wrong TIN or not including one at all
- Using a form for the wrong tax year
- Not using the correct form from the IRS (you cannot download or copy it)
Tip: If the error is less than $100 for income or less than $25 for withholding, then you do not need to file a correction.
Step 2: Fix Your Errors
If you filed the wrong form, either type or year, or the wrong amount, then you can easily file a correction form with the information you already have.
If you reported an incorrect TIN or forgot to include one at all, then you need to speak to your contractor or employee to receive the correct TIN. Once you do, update the form and file the correction. You should also update the TIN in their personnel file.
Tip: Use eFile360’s TIN Checking service to avoid this penalty.
If you made a different error and need assistance preparing the correction, we recommend seeking out an accountant. Our team can answer some of your questions, but we are not a team of tax advisors and cannot provide any tax advice.
Please note that filing a correction does not necessarily mean that you will not be penalized or fined by the IRS. Filing a correction may only lower the amount you are penalized, but it is worth it to do so, not only for financial reasons, but also because those forms affect your employees’ tax returns.
Step 3: File a Correction for Each Form with Errors
Once you have the correct information for the 1099 or W-2 form, you are ready to file a correction. If you are filing via paper, you will also need to file Form 1096. If you are e-filing, you do not need to include this form with your corrections.
Please note that if you are filing more than 250 corrections, the IRS requires that you e-file.
Tip: If only some of your forms were filed inaccurately, you only have to file corrections for those forms. You do not need to file corrections for forms that were correct the first time.
File corrections with eFile360. Sign up for a free account here. We offer correction filing for the current year as well as the previous three years. The cost of filing a correction is the same as filing an original form.