Whether you submitted incorrect income information based on a Form 1099 given to you by a client or other issuer, or you submitted an incorrect 1099 to the IRS as a payor to a client or vendor, you'll need to correct that mistake.
Submitting the wrong information to the IRS can lead to penalties and fines, and cause headaches for everyone involved. Reviewing the process for correcting a 1099 mistake will help you get things fixed in the quickest way possible.
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Form 1099 Basics
Employees receive a Form W-2 at the end of the year, showing how much they've earned and how much tax was withheld and submitted to local and state governments and to the federal government. Some contractors, vendors, suppliers and those who received payments from other specific sources, such as dividends, will get a 1099.
While employers take taxes out of your paycheck that show on your W-2, businesses that supply you with a 1099 don't take taxes out of your payments. Instead, they just report the payments to the IRS and send you a copy of the 1099 so you know what was reported. This helps you to prepare your tax returns.
Read More: W-2 Forms: What It Is, Who Gets One and How It Works
Verify the Error
The business or person who issued the incorrect 1099, and the person or business that received it, should be on the same page about the error. Don't assume the other will corroborate your correction if contacted by the IRS. If you are the recipient of the incorrect 1099, contact the issuer, confirm the error, then ask the company or individual to send a corrected 1099 to the IRS.
If you are the issuer of the incorrect 1099, contact the party you sent it to and confirm the error. That party will need to amend their tax return, and you'll need to send a corrected 1099 to the IRS.
Correcting as the Issuer
If you issued the incorrect 1099, you can go to the IRS website and download a copy of the Form 1099 used, but there's one problem: Copy A, which the issuer sends to the IRS, is printed in red ink. It may not print on your computer in a way that the IRS can scan it, and it would not be accepted by the IRS if submitted in that case. You can still visit the link above to review the form and the directions at the web page.
You should be able to get a submittable 1099 from your tax preparer, contact your regional IRS office for a copy, or go to the IRS website for requesting official forms. This can take 10 days or longer, however. You can also do a Google search for 1099 forms and order one from a commercial provider.
Make sure to request the correct version of Form 1099 as there are several. Follow the directions on the form, starting by checking the "CORRECTED" box at the top of the form. You'll need to enter the names of the issuer and the recipient, both of your tax ID numbers, along with other information. You will also need to include a Form 1096 with the 1099 re-submission.
You can get more information for correcting submitted tax documents in the IRS publication, "General Instructions for Certain Information Returns." If using the 2022 version of this document, look on page 10 under the heading, "H. Corrected Returns on Paper Forms."
Correcting as the Recipient
If you filed your taxes and later find that the 1099 information submitted for you is incorrect, contact the 1099 issuer. Confirm the problem and ask them to submit a corrected 1099. If you can't get hold of them or they are not cooperative, call the IRS at 800-829-1040 to request assistance. You can also visit the IRS website for more information on how to handle this.
You'll need to talk to a tax professional about amending your tax return. If the issuer of a 1099 sent an incorrect 1099 to the IRS, you should have no problems, fines or penalties, as long as the issuer sends the IRS a corrected Form 1099. If not, you might have to jump through a few more hoops, such as calling the IRS to explain the situation in order to get your return amended.