How to Correct a 1099 Misc Mistake for a Previous Year

Prior year errors require simple corrections.

The Internal Revenue Service (IRS) requires that miscellaneous income paid to persons in the course of trade or business during the year be reported using the miscellaneous income information return 1099-MISC. This includes payments such as rents, royalties, non-employee compensation, gross attorney proceeds and other types of income. Certain payment types such as rent, non-employee compensation and health care services must exceed $600 before completion of the form is required. The IRS provides guidance on correcting errors made when completing the 1099-MISC form.

Step 1

Determine the type of error that was made in the prior year. Errors such as an incorrect code, amount or payee name or address can be corrected using one form and are considered type 1 errors. Errors such as an incorrect or lacking payee TIN or incorrect name and address require you to make the correction using two forms and are considered type 2 errors.

Step 2

Correct type 1 errors by completing a new 1099 form for the year in which the mistake was made. Check the box labeled "Corrected" at the very top of the 1099 form. Correct the field that contains the error and update the rest of the form with the information reported in the prior year. Complete and submit an updated Form 1096, Annual Summary and Transmittal of U.S. Information Returns, to the IRS.

Step 3

Correct type 2 errors by completing a new 1099 form for the year in which the mistake was made. Check the box labeled "Corrected" at the very top of the 1099 form. Complete all payer and recipient fields with the same information that was included on the form that contained the mistake. Enter zero in the amount fields 1 through 18. Next complete a new 1099 form for the prior year with the correct information. Do not check the box labeled "Corrected." Complete an updated 1096 form, Annual Summary and Transmittal of U.S. Information Returns, with the updated information. In the bottom margin of the form, write the words "filed to correct" and briefly state the correction. Submit to the IRS the corrected 1099 and the new 1099 for the prior year and the updated 1096 form.

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