February 20 2024

How to Correct 1099s Forms Already Submitted to the IRS

Table of Contents

Correcting 1099s Forms: A Step-by-Step Guide to Fixing IRS Submissions

Uh oh! Filed Incorrect 1099s? Here’s How to correct 1099s FAST. If you are a business owner or a self-employed individual, you may have to file 1099 forms to report certain payments you made to others during the tax year. However, mistakes can happen, and you may need to correct 1099 forms that you have already submitted to the IRS. In this blog post, we will explain how to correct 1099 forms depending on the type of error and the method of filing.

Tips for How to Correct 1099s:

Review and Identify Errors: Carefully go through each 1099 form to pinpoint mistakes such as incorrect amounts or missing information.
File Corrected Forms Promptly: Once errors are identified, don’t delay in submitting corrected forms to the IRS and the recipients. Timely correction helps prevent further complications.
Use Form 1096 for Corrections: If errors are discovered after submission, utilize Form 1096 to correct the information promptly. Include a brief explanation of the corrections made.
Communicate with Recipients: Inform recipients of the corrected forms to ensure they have accurate records for their tax filings. Open communication can prevent confusion and potential disputes.

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Types of Errors

There are two types of errors that require different correction procedures:

Error type 1: Incorrect money amount(s), code, or checkbox, or a return was filed when one should not have been filed. These errors require only one corrected return to make the correction.
Error type 2: No payee TIN (SSN, EIN, QI-EIN, or ITIN), incorrect payee TIN, incorrect name and address, or original return filed using wrong type of return (for example, a Form 1099-DIV was filed when a Form 1099-INT should have been filed). These errors require two separate returns to make the correction properly.

Methods of Filing

There are two methods of filing 1099 forms: paper filing and electronic filing. The correction process differs depending on the method you used to file the original return.

Paper Filing

If you filed the original return on paper, you will need to file the corrected return on paper as well. You will need to order the official IRS forms online or over the phone, as you cannot use a downloaded or photocopied form. You will also need to fill out a new Form 1096, which is a transmittal form that summarizes the information on the 1099 forms.

To correct a paper-filed return, follow these steps:

For error type 1, prepare a new 1099 form with the correct information. Enter an “X” in the “CORRECTED” box at the top of the form. Prepare a new Form 1096 with the correct information. File Form 1096 and Copy A of the 1099 form with the appropriate IRS service center. Do not include a copy of the original return that was filed incorrectly.
For error type 2, you will need to file two returns. First, identify the incorrect return that was submitted. Prepare a new 1099 form with the same information as the original return, except enter 0 (zero) for all money amounts. Enter an “X” in the “CORRECTED” box at the top of the form. Prepare a new Form 1096 with the same information as the original Form 1096, except enter 0 (zero) for the total amount. File Form 1096 and Copy A of the 1099 form with the appropriate IRS service center. Second, report the correct information. Prepare a new 1099 form with the correct information. Do not enter an “X” in the “CORRECTED” box at the top of the form. Prepare a new Form 1096 with the correct information. File Form 1096 and Copy A of the 1099 form with the appropriate IRS service center.

Electronic Filing

If you filed the original return electronically, you can file the corrected return electronically as well. You will need to use the same software or service that you used to file the original return, as the IRS will not accept corrections from a different source. You will also need to follow the specific instructions of the software or service that you use, as they may vary slightly.

To correct an electronically-filed return, follow these steps:

For error type 1, prepare a new 1099 form with the correct information. Enter an “X” in the “CORRECTED” box at the top of the form. Submit the corrected 1099 form through the software or service that you use. Do not include a copy of the original return that was filed incorrectly.
For error type 2, you will need to file two returns. First, identify the incorrect return that was submitted. Prepare a new 1099 form with the same information as the original return, except enter 0 (zero) for all money amounts. Enter an “X” in the “CORRECTED” box at the top of the form. Submit the corrected 1099 form through the software or service that you use. Second, report the correct information. Prepare a new 1099 form with the correct information. Do not enter an “X” in the “CORRECTED” box at the top of the form. Submit the corrected 1099 form through the software or service that you use.

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Deadlines and Penalties

The deadline to file 1099 forms with the IRS is January 31 of the year following the tax year. However, if you discover an error after the deadline, you should still file the corrected return as soon as possible. The IRS may impose penalties for late or incorrect filing, depending on the amount of the error and the reason for the delay. The penalties range from $50 to $550 per form, depending on how late you file and how many forms are affected. You can avoid or reduce the penalties if you can show reasonable cause for the error or delay.

Conclusion

If you are a business or a self-employed individual, you need to file 1099 forms to report certain payments to the IRS. However, sometimes you may make errors on the 1099 forms that you have already sent to the IRS. To fix these errors, you need to follow the correction process that matches the type of error and the way you filed. You should file the corrected return as soon as you can to prevent or reduce penalties. If you need further assistance with filing or correcting 1099 forms, you can call the IRS at (800) 829-3676.