How to correct 1099 errors?

When you file a 1099-MISC, many things can go wrong, and you may have to correct those errors by submitting a correction form. Here is the list of possible errors:

Wrong amounts: If the amount you entered on your 1099-Misc form is incorrect, you have to change the amount. This is a common error and results in either under or over-reporting.

Wrong box: If you entered the correct amount, but you entered it in a wrong box, it is an error that you must fix. Use the right box is important as different boxes have different tax implications for the recipients of the form.

Wrong payee information: Payee information including name, tax-id (EIN or SSN), or address may be incorrect. It is common for your payees to provide you incorrect information – for example, they may have given you their name and SSN instead of their business name and EIN, or they may have given you their name with their business EIN or vice versa. The IRS checks the name and Tax Id with their records, and if the two do not match, it is flagged as incorrect. You may end up receiving a B-Notice to indicated that you had filed an invalid name of tax-id.

Wrong payer information: You will be surprised at how often businesses make this mistake when they file their name of tax id that is incorrect.

Duplicate reporting: If you have filed many forms more than once, this may result in duplicative amounts and must be corrected.

Issuing a 1099-MISC form by mistake: Issuing a form when it was not supposed to be issued, either because the amount was under the threshold or because the payee business entity was not supposed to get this form.

 

If you make any one of the above mistakes and field your form, you must file a corrected form as soon as possible and issue a corrected form to the payee (or recipient of the form).

The IRS allows you to file corrected forms if you made any errors on the original filing. Please note that for certain errors, you may have to submit two forms to correct the mistake. According to the IRS guidelines, the 1099-MISC errors are divided into three types:

Type 1 Error on 1099-MISC:

If the error is due to the wrong amount reported, the amount reported in the wrong box or filed a 1099-MISC form that should not have been filed. To fix any of these errors, you need to file a single corrected form.

How to correct Type 1 errors on 1099-MISC?

If you have filed a form that should not have been filed please submit a corrected form with 0 amounts. If you have reported incorrect amounts or box information, then please submit a corrected form with corrected information. Please see the instructions on creating the corrected form for more information.

Type 2 Error on 1099-MISC:

If you reported the wrong payee name or tax Id on the original form, you need to file two corrected forms to fix the error.

How to correct Type 2 errors on 1099-MISC?

If the wrong payee name or tax Id was reported, then you must file two correction forms. First, you need to submit a form with the wrong payee name and tax-id (as filed on the original form) with 0 amounts to void the original form. Then a second form is filed with the correct name, tax id, and correct amount.

Type 3 Error on 1099-MISC:

Following list shows the errors that are type 3 errors:

Duplicate reporting – if multiple duplicated 1099 forms have been submitted in error, IRS should be contacted immediately for instructions on how to avoid notices.

A wrong payer (not recipient) name or TIN number was reported by mistake.

 

Please follow the IRS guidelines for more information on filing corrected returns in case of wrong Payer Name and or TIN. Refer to Section 10 on page 15.

How to correct Type 3 errors on 1099-MISC?

The standard correction process will not resolve the duplicate issue. You must write a letter to the IRS containing the following information: (a) Name and address of payer (b) Type of error (include the incorrect payer name/TIN that was reported) (c) Tax year (d) Correct Payer TIN (e) TCC - Transmitter Control Code (f) Type of return (g) Number of payees (h) Filing method, paper or electronic (i) Was Federal income tax withheld?

We at eFile360, support filing of corrected forms with the IRS and mail recipients' corrected statements. Please note you can file corrected forms using our service, even if you did not file the original forms with us. We also support filing corrections forms for the originals filed in the past three years.

You can file corrected forms yourself by logging in to your account and going to corrections filing. You can file correction forms yourself only once; you cannot file correction forms multiple times for the same payee.

Please contact us if you need help filing correction forms for previous years, or if you did not file your original forms with us.

Important Note:

There might be some penalty associated with correction forms that are not filed timely. Please see more information on how to avoid 1099 penalties. The IRS recommends filing the correction forms as soon as you discovered the error.