what to do if 1099 has wrong ssn

What is Revenue enhancement Form 1099?

An essential component of your year-end planning is data return filing. These forms come with a special set of rules. When not filled out properly, your business can be subject area to penalties or other potential financial and reporting issues.

Information returns forms are mostly used to notify the authorities and taxpayers about taxable payments you or your business made. The well-nigh common types of data returns at yr-end are Due west-two forms and 1099 forms.

At its most bones, the divergence between W-two and 1099 forms is this:

• W-2 forms are given to employees of a visitor
• 1099 forms are given to contractors working for a visitor

What's the departure between W2 and 1099?

Once you've determined that you've hired an independent contractor, the Class 1099 is incredibly important. Here are ten mutual mistakes nosotros meet clients brand when filing form 1099.

1. Non filing a form when a course is needed.
The biggest mistake we see is that taxpayers neglect to file an information return when ane is required. At that place are several situations that crave a Course 1099 or other information return to be filed. If you're not sure whether or not yous need to file a 1099 course, you lot can download our 1099 e-book to learn more.

2. Not filing by the due date.
In general, all data returns are due to the recipient by Jan 31, 2022. Forms W-2 and 1099-NEC are due to the IRS byJan 31, 2022, equally well, regardless if you electronically or paper file. For the well-nigh part, the rest of the 1099 forms are due to the IRS byFebruary 28, 2022, if paper filing orMarch 31, 2022, if electronically filing.

The all-time way to avoid bug with 1099 filing is to beginning preparing early. Review your vendor information earlier year-cease to exist sure y'all take all the Form Due west-9s and other information required to file these forms.

iii. Completing the wrong course.
If newspaper filing, be sure to utilize the right year of the course. Make sure to prepare the carmine Copy A to exist filed with the IRS. Also, ensure yous commencement with the right Form 1099, ex. 1099-MISC or 1099-INT, etc.

4. Using the wrong box on the class.
When preparing your forms, even if you lot accept the correct class, be certain to use the proper box on the form. On the Form 1099-MISC, in that location are several boxes the IRS taxes in dissimilar ways:

• Rent (box 1) may exist shown on a 1040 Schedule E
• Other income (box 3) may exist shown on a 1040 Schedule C or other 1040 form
• The IRS will care for different types of income differently as shown on different boxes. Different types of income may have different tax rates and rules based on the box and form information technology is placed on.

5. Not reporting a Taxpayer ID Number (Can) or reporting an incorrect Can.
Be sure you lot are receiving and regularly updating the Form W-9 for your vendors so y'all tin exist sure you accept appropriate data to file information returns at yr-stop. You lot can besides become to the IRS website and run the information through a Can verification to run into if what you received from your vendor matches the IRS records. Another cardinal affair to spotter out for here is using the appropriate name for the TIN received. In some cases, you lot will receive a Social Security number for a Schedule C business but will receive the entities doing business every bit (dba) proper name instead of their name. When the IRS attempts to match the Social Security number with the dba name in the system, they will not match considering they will be expecting a person's proper noun.

6. Using wrong data to complete the grade.
Double check your records to be certain you are using the appropriate amounts for the right yr and the correct vendor. Make sure you lot are using the vendor's correct name and address for the form. Several bookkeeping systems will track 1099 data for you, but you must set it upwardly correctly.

7. Filing a paper return when electronic filing is required.
The IRS requires a payer to due east-file the data return forms when the number of forms for a single type of form for the year is more than 250. This is a per-class count, so if you have five 1099-INT forms and 300 1099-MISC forms, you are but required to e-file the 1099-MISC forms. You lot can register to e-file forms at https://burn down.irs.gov/. In that location are regulations pending that may reduce this 250 number, but at this indicate, they have non been issued.

8. Non sending in a Course 1096 transmittal when newspaper filing.
A Form 1096, a transmittal grade, is required when paper filing. 1 Class 1096 is required per blazon of 1099 filed. This helps the IRS to know if they have received and read all forms attached. This class is not required when you lot electronically file.

9. Not preparing car readable forms.
The IRS will machine read these forms. It is important to write legibly and in night ink so the forms tin be auto read correctly.

10. Improper formatting of name, address, etc.
Completing a proper name or address in the incorrect format will cause the form to be misread, as information technology is read by machines. Be sure to fill out the form in the proper format so it can be candy correctly.

Learn more well-nigh the requirements of Grade 1099.

It is highly unlikely that you will go through 1099 filing season and not come beyond one required correction, but correcting forms is easy once you sympathise the process.

Types of 1099 Errors

There are ii types of 1099 errors to be corrected. Type 1 only requires 1 Form 1099 to be filed to correct the error. Blazon 2 requires two 1099 forms to be filed to brand the correction.

Blazon one Errors
Type 1 errors occur when you prepare a form with:

• The incorrect corporeality
• An incorrect lawmaking or checkbox
• An wrong payee name or address
• Or, when you filed a grade when 1 should not accept been filed

To correct Type 1 errors, file the correct form with the right amount, code, checkbox, proper noun or address and check the "CORRECTED" box (generally located at the top of the class). Send the corrected form to the recipient and prepare the red Copy A to transport to the IRS with the Grade 1096 transmittal if paper filing. For electronic filing, you do not need to send in a Form 1096, nor should you send in the originally filed forms with the correction to the IRS.

Blazon ii Errors
Type ii errors occur when you prepare a form with:

• The wrong payer data, including the incorrect Taxpayer ID Number (TIN)
• The wrong recipient information, including the incorrect Tin can
• Or, when you lot set up the wrong form (similar a 1099-INT instead of a 1099-DIV)

To right Type 2 errors, you volition need to file two form 1099s:

1. The first 1099 will be with the exact aforementioned payer and recipient information equally the originally filed form, but the amounts on the class will be all zeros and the "CORRECTED" box will exist checked. This will remove the originally filed form from the IRS records.
2. And so, you will demand to file a new Form 1099 with the appropriate information every bit an originally filed form (non a corrected form).

   Send the corrected and new original forms to the recipient and prepare the reddish Copy A to send to the IRS with the Form 1096 transmittal, if paper filing. A dissimilar Form 1096 is required for each blazon of Form 1099 filed. For electronic filing, you do non need to send in a Form 1096.

Other Items to Notation in 1099 Corrections

If the recipient of the form has different data in their records, they volition probable contact yous for an explanation or correction of the Form 1099. Occasionally, this difference in records is due to a check being written from your bank account and not yet deposited in the recipient account. It is important to investigate differences noted from the recipients. What is on those forms volition need to be what is reported on their tax return and y'all don't want to be the cause of wrong information.

An IRS notice is the other main reason to amend a form. This generally relates to a TIN that doesn't match what the IRS has for the recipient name.

But remember—when correcting forms, be certain to verify the type of error, so you know if you need to set up 1 1099 or ii to complete the correction.

Need more guidance?

tabermispond.blogspot.com

Source: https://www.eidebailly.com/insights/articles/2020/1/what-you-need-to-know-to-correct-form-1099

Share this post