So you’ve realized you’ve made a mistake on a 1099 form that you’ve already filed. Maybe you’ve put the wrong TIN; maybe you’ve accidentally entered the wrong amount; maybe you’ve confused addresses. Whatever the reason is, you don’t need to fret. You can submit a 1099 amendment or corrected form to the IRS.
In this guide, you’ll learn how to amend a 1099 form if you’ve messed up, and how to remain tax-compliant.
What You Should Know About Form 1099
Although 1099s have several variations, we’ll look at the Form 1099-NEC and Form 1099-MISC in this article.
Form 1099-MISC is an IRS tax form that helps in reporting miscellaneous income that includes rent, legal payments, health fees, royalties, among others.
Form 1099-NEC, on the other hand, is used to report nonemployee compensation. Previously, nonemployee compensation belonged in Form 1099-MISC, but that has since changed. The IRS now requires businesses to report any payments of at least $600 to nonemployees, such as independent contractors or freelancers, on the new Form 1099-NEC. Non-employee compensation can include commissions, fees, prizes, and awards.
That said, how do you correct a mistake on a Form 1099-MISC or Form 1099-NEC that you’ve already sent to the IRS?
How To Amend a 1099 Form That You’ve Already Filed
Correcting 1099 mistakes isn’t as difficult as you might imagine. You just need to fill out a new, corrected form and mail it out to the IRS, and ensure you mark the “corrected” box that’s at the top of your 1099. This allows the IRS to differentiate your new form from others that are either voided or filed for the first time. Also remember to avoid sending the original copy.
Note that you also need to include a new form 1096 along with the amended return. Form 1096 is a reconciliation sheet that outlines the information from all the 1099 forms you send to the IRS.
Form 1096 needs to accompany each batch of 1099 forms submitted. However, if you’re filing your returns electronically, you don’t need to include the transmittal form.
What if You Incorrectly Put Your Name or TIN?
With some errors, you don’t need to file a corrected 1099 form. When you make a simple mistake -- such as entering your name or TIN (or both) incorrectly -- you only need to send a letter to the IRS, and it needs to include the following:
That said, the following are some of the errors that the IRS penalizes:
Filing manually or on paper when you're required to file electronically or e-file
Failing to report a Taxpayer ID
Reporting the wrong Taxpayer ID
Filing after the due date
Filing a paper that’s not machine-readable
Failing to send a 1099 to your independent contractor
If you don’t reveal all the relevant information about you as a payer
How To Nullify a 1099
So far, we’ve explained how you can correct an error after you’ve submitted your form to the IRS. But what if you haven’t sent it yet?
Let’s say you’re filing a 1099 sheet that contains several 1099 tax forms. Each 1099 form reports the income of separate independent contractors.
If you realize you’ve made a mistake with one of the forms, then you may have to void it. Voiding allows you to cancel out a form on a 1099 sheet, saving you from the hassle of redoing everything.
You also need to know that you can’t detach a form from a 1099 sheet. The IRS doesn’t accept any detached forms for processing. So, if you discover a mistake when typing your 1099 data, then your only suitable option is to void the form.
Input the correct information for the 1099 you’ve voided. If the voided form belongs to an independent contractor who needs a 1099, then enter the accurate information on the next blank 1099 on your sheet.
Prepare Form 1096
Send both the voided and corrected 1099s (plus Form 1096) to the IRS or required state department
Note that if your business files less than 250 forms a year, then you may submit paper 1099s to the IRS. But if your business files over 250 forms a year, then you need to e-file.
When You Make Too Many Mistakes
Sometimes you may mess up, and you don't have any solutions to your problem. Instead of trying to bail yourself out of the situation, you can get some help from the IRS.