How to File a Corrected 1099 With the IRS
Correcting an inaccurate Form 1099 is a manageable process. Learn the specific IRS requirements for different types of errors to ensure an accurate filing.
Form 1099 is a series of documents the Internal Revenue Service (IRS) refers to as “information returns.” These forms are used to report various types of non-employment income to the IRS and the person or business that received the payment. Common examples include Form 1099-NEC for nonemployee compensation and Form 1099-MISC for miscellaneous income like rent or royalties. Mistakes in reporting this information are not uncommon. Filing a corrected 1099 ensures that both the recipient and the IRS have accurate information for tax reporting purposes, preventing potential issues such as incorrect tax assessments or penalties.
Identifying the Error and Required Information
Before a correction can be made, a filer must diagnose the specific type of error on the original Form 1099. The IRS categorizes mistakes into two primary types. A Type 1 error involves incorrect information such as dollar amounts, a wrong code in a box, or an incorrect recipient address. This category also includes instances where a form was filed when it was not necessary. If the only mistake is an incorrect address, a formal correction with the IRS is not required, though the recipient should receive a copy with the updated address.
A Type 2 error is more complex and involves a mistake in the recipient’s Taxpayer Identification Number (TIN), a wrong last name, or filing a form for the wrong person. Once the error type is identified, you must gather all necessary documentation. This includes a copy of the original, incorrect Form 1099 and the correct information, which may include the accurate TIN, the correct legal name of the recipient, their current address, and the precise dollar amounts.
Completing the Corrected Form 1099
The method for completing a corrected Form 1099 depends on the nature of the mistake.
Correcting a Type 1 Error
For a Type 1 error, such as an incorrect payment amount, you will need a new, blank copy of the same form type you originally filed. At the top of this new form, you must check the box labeled “CORRECTED.” You then proceed to fill out the entire form with the correct information, including all payment amounts and recipient details, ensuring every field is accurate.
Correcting a Type 2 or Wrong Form Type Error
Correcting a Type 2 error (incorrect TIN or name) or filing the wrong type of form requires a two-step approach. The first step is to void the original, incorrect filing. To do this, take a new form, check the “CORRECTED” box, and enter the payer and recipient information exactly as it appeared on the initial incorrect form. For all the payment boxes, you will enter “$0” to nullify the first return.
The second step is to create a new and accurate information return. You will take another new Form 1099 and fill it out with all the correct recipient information and payment amounts. For this second form, you must not check the “CORRECTED” box. This is treated as a new, original submission to the IRS.
Filing the Corrected Form with Government Agencies and Recipients
After the corrected forms are accurately filled out, they must be properly filed. If you are submitting paper forms to the IRS, each batch of corrected 1099s must be accompanied by a Form 1096, Annual Summary and Transmittal of U.S. Information Returns. This form acts as a cover sheet, summarizing the information. You must use a separate Form 1096 for each type of 1099 form you are correcting. For Type 2 errors, it is good practice to write a brief explanatory phrase like “Filed To Correct TIN” in the bottom margin of the Form 1096.
The completed Copy A of the corrected 1099s and the corresponding Form 1096 must be mailed to the correct IRS service center. The mailing address can be found in the official IRS instructions for Form 1096. Do not include a copy of the original, incorrect return with your new filing. The IRS also provides an electronic filing option through its Information Returns Intake System (IRIS). If you originally filed electronically, you may be able to submit the correction through the same system.
Beyond filing with the IRS, you have an obligation to the person or business whose information you are correcting. You must send the recipient a copy of the corrected Form 1099. This ensures they have the accurate information needed to file their own tax return or amend one they have already submitted.
Finally, filers must consider state-level requirements. Many states have their own income tax and information reporting rules that mirror the federal system. If you filed the original 1099 with a state tax agency, you will likely need to file a corrected version with that agency as well. The specific procedures for state-level corrections can vary, so it is necessary to check the requirements of the relevant state’s department of revenue.