What You Need to Know to Correct Form 1099

January 2020 | Article

By Jillian Robison

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

Hoping to catch your mistakes early?
We’ve compiled a list of the top 10 1099 filing mistakes you need to care about.

Types of 1099 Errors
There are two types of 1099 errors to be corrected. Type 1 only requires one Form 1099 to be filed to correct the error. Type 2 will require two 1099 forms to be filed to make the correction.

Type 1 Errors
Type 1 errors occur when you prepare a form 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 correct form with the correct amount, code, checkbox, name or address and check the “CORRECTED” box (generally located at the top of the form). Send the corrected form to the recipient and prepare the red Copy A to send to the IRS with the Form 1096 transmittal if paper filing. For electronic filing, you do not need to send in a Form 1096, nor should you send in the originally filed forms with the correction to the IRS.

Type 2 Errors
Type 2 errors occur when you prepare a form 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 form 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. 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 of the form has different information in their records, they will likely contact you for an explanation or correction of the 1099 Form. Occasionally, this difference in records is due to a check being written and deposited, or something similar.

An IRS notice is the other main reason to amend a form. This generally relates to a TIN that doesn’t match what the IRS has for the recipient name.

Just remember—when correcting forms, be sure to verify the type of error, so you know if you need to prepare one 1099 or two to complete the correction.

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