I Filed My Taxes but Forgot a 1099. What Should I Do?

Forgetting to include a 1099 when filing taxes is a common mistake, but it’s important to address it quickly. The IRS receives copies of all 1099s issued to you, meaning any missing income could be flagged. Acting promptly can help minimize penalties and complications.

Potential Consequences of Omitting a 1099

Leaving out a 1099 can create a mismatch between what you reported and what the IRS has on file. Since financial institutions and clients submit copies of these forms directly to the IRS, unreported income may trigger a CP2000 notice, which alerts you to the discrepancy and proposes additional tax liability.

If the omission leads to underreported income, the IRS may assess additional taxes along with interest, which accrues daily from the original due date of the return. As of 2024, the interest rate for underpayments is the federal short-term rate plus 3%, adjusted quarterly.

Penalties may also apply. If the IRS views the omission as negligence, they could impose a 20% accuracy-related penalty. In cases of willful tax evasion, fraud penalties of up to 75% may be assessed. While most taxpayers won’t face fraud charges for a simple oversight, repeated omissions or large discrepancies could increase scrutiny.

Amended Return Procedures

If you forgot to include a 1099, you can correct the mistake by filing an amended return using Form 1040-X. The IRS allows taxpayers up to three years from the original filing deadline to amend a return or two years from the date the tax was paid, whichever is later. Acting quickly can help reduce interest and penalties.

Gathering Correct Forms

Before filing an amended return, collect all relevant documents to ensure accuracy. This includes the missing 1099 form, whether for self-employment income, interest earnings, or dividends. If you misplaced the form, request a copy from the issuer or check your financial institution’s online portal.

Review your original tax return to determine how the missing income affects your overall tax situation. Additional income could push you into a higher tax bracket or alter deductions and credits. Reviewing IRS Publication 525 can help clarify necessary adjustments.

Adjusting Reported Income

Once you have the correct forms, update your income figures on Form 1040-X. The form consists of three columns: the originally reported amount, the corrected amount, and the net change. Enter the missing income in the appropriate section and recalculate your total taxable income.

If the additional income affects deductions or credits, those must also be adjusted. For example, changes in income can impact eligibility for tax benefits such as the Earned Income Tax Credit or Premium Tax Credit. Self-employed individuals may need to recalculate self-employment tax using Schedule SE.

Check whether the new income affects eligibility for tax benefits such as IRA contribution deductions or student loan interest deductions, which have income phase-out limits. The IRS updates these thresholds annually, so reviewing the latest figures on IRS.gov can help ensure compliance.

Completing the Filing

After making the necessary adjustments, complete Form 1040-X and submit it to the IRS. If you owe additional tax, paying as soon as possible will minimize interest and penalties. Payments can be made electronically through IRS Direct Pay or by mailing a check with the amended return.

If the correction results in a refund, the IRS typically processes amended returns within 16 weeks, though delays can occur. You can track the status of your amended return using the “Where’s My Amended Return?” tool on the IRS website.

Keep copies of all amended return documents, including the original and corrected tax returns, supporting 1099 forms, and any correspondence with the IRS. This documentation may be useful if the IRS requests further clarification or if you need to reference the changes in future filings.

Possible IRS Inquiries

The IRS uses automated systems to detect discrepancies, and a missing 1099 can trigger a review. While not every omission results in immediate action, the agency may send a notice requesting clarification.

Correspondence audits are the most common form of IRS inquiry for income mismatches. These typically involve a letter requesting additional documentation. Failure to respond within the specified timeframe may result in the IRS assessing the tax by default, along with applicable interest.

For higher-income individuals or those with complex financial arrangements, the IRS may conduct a more in-depth review. If multiple years of tax returns exhibit similar omissions, the IRS may expand its inquiry beyond the most recent filing.

Refund or Payment Adjustments

If an amended return results in additional tax owed, timely payment is important to prevent further interest accumulation. The IRS calculates interest from the original due date, meaning even a minor underpayment can grow over time. If the amount due is significant and cannot be paid in full, the IRS offers installment agreements.

For those expecting a refund after correcting their tax return, the process is slower than for an original return. Amended returns are manually reviewed, and refunds can take up to 16 weeks. If the adjustment results in an overpayment, the IRS may apply the excess amount to any outstanding federal or state tax debt before issuing a refund. In some cases, interest is paid on delayed refunds.

Document Retention for Future Filings

Keeping thorough records of tax documents helps prevent future errors and ensures compliance in case of an IRS inquiry. Taxpayers should retain copies of all 1099 forms, amended returns, and supporting documents for at least three years from the filing date, as this aligns with the IRS’s general audit window. However, if a return includes substantial underreported income, the retention period may need to be extended.

Organizing records digitally can make retrieval easier. Many financial institutions and payroll providers offer online access to tax forms, but downloading and storing them separately ensures availability even if an account is closed. Taxpayers who receive multiple 1099s should reconcile their reported income with their bank deposits and accounting records to catch discrepancies before filing.

When to Seek Expert Assistance

While minor errors can often be corrected independently, certain situations warrant professional guidance. If the omitted 1099 involves complex tax implications, such as stock sales or retirement distributions, consulting a tax professional can help ensure accurate reporting.

Taxpayers facing an IRS notice, such as a CP2000 proposing additional tax, may also benefit from expert assistance. A tax professional can review the notice, determine whether the IRS’s calculations are correct, and help draft a response. If penalties are assessed, they may be able to request an abatement under reasonable cause provisions. In cases where a taxpayer is unable to pay the additional tax owed, an expert can assist in negotiating a settlement or installment agreement with the IRS.