Changes to Form 1099-MISC and 1099-NEC in the tax year 2020 mean you should be extra vigilant in your filing of these forms to prevent errors. But what happens if your 1099s have errors? Let’s talk about it.
One of the first major errors you can encounter is the use of the wrong form. With the updates regarding 1099-MISC and 1099-NEC, it’s very easy to flip-flop these forms and fill them out incorrectly. The Balance Small Business uses the example that you have to use the 1099-NEC for attorney fee payments, but you’ll report gross proceeds to attorneys from lawsuits using the 1099-MISC.
If you use the wrong form, be sure to double-check the instructions and let your tax service know, or – if you are doing the filing yourself – prepare and file the red Copy A with the IRS.
Filling in the Wrong Box
Sometimes, it’s not the form that is wrong, it’s the box you used incorrectly. Some examples include rent, which is found on box 1 and which will be shown on a 1040 Schedule E, or “other income” (which in and of itself is tricky to understand) which can be found on a 1040 Schedule C or other 1040 form.
The IRS treats different income types very differently, depending on what boxes you choose to use. For 1099-MISC and 1099-NEC, be sure you have thoroughly read the instructions from the IRS before you begin inputting your information on the final forms.
Name and TIN Errors
If you made a mistake regarding your name, taxpayer identification number (TIN), or both, you will not need to file a corrected 1099. Instead, you will need to write a letter to the IRS with the following information included:
- Name and address
- Type of error, Tax year
- Transmitter Control Code
- Type of return
- Number of payees
- Filing method
- Whether federal income tax was held
The letter must be mailed to:
Internal Revenue Service Information Returns Branch 230 Murall Drive,
Mail Stop 4360 Kearneysville, WV 25430
Filing Corrected 1099s
If you have fewer than 250 forms that need to be corrected, you can file them electronically or by paper. But if you have more than 250 corrections to file, they must be filed electronically.
When to Void 1099s
If you find mistakes on a completed or partially completed 1099 but you haven’t yet submitted it to the IRS, you can void it. Simply put an “X” in the “CORRECTED” box. This allows you to cancel out one form that has been printed on a sheet of paper with other forms, without having to start over.
Once you’ve voided the form with mistakes, you can just start a new form and enter the correct information. The IRS will skip over the forms you’ve voided.
Electronic 1099 Filing
eFile360 is the most cost-effective way of e-filing your information returns. We can assist with mail and e-file, combined federal and state filing, corrections filing, TIN check, e-delivery, and outsourcing.
To streamline the filing process, sign up for a free eFile360 account today.