Correcting Errors on Form 1099

At the conclusion of each year, small business owners are tasked with preparing 1099 forms to disclose payments made to non-employees and other parties. In the event of an error on a 1099 form, it is crucial to rectify the mistake with both the Internal Revenue Service (IRS) and the recipient. This article provides an overview of 1099 forms, the process for correcting them, and reporting amended payments.

Key Points to Remember:

Small businesses must file various types of 1099 forms annually to report payments and taxpayer identification numbers.

Common types of 1099 forms include 1099-NEC for non-employee payments and 1099-MISC for rents, royalties, and miscellaneous payments.

Missing or incorrect taxpayer identification numbers are significant errors on 1099 forms.

Issuing Form 1099

Small businesses issue multiple types of 1099 forms to report taxable payments to different parties. The most frequent types of 1099 reports are:

Form 1099-NEC for non-employees

Form 1099-MISC for various payment types

Form 1099-DIV for dividends and distributions to shareholders

The IRS categorizes 1099 forms and similar documents as "information returns." Some requirements are universal across all forms, while others vary based on the specific form. Forms 1099-NEC and 1099-MISC are particularly common among small businesses. For example, Form 1099-NEC is used to report payments to non-employees supplying services to the business, such as freelancers, independent contractors, and lawyers. On the other hand, Form 1099-MISC covers different payment types, including royalties, rents, prizes, and awards.

Sending 1099 Forms

Each 1099 form has multiple copies designated for various recipients, including the IRS, state tax agencies, payees, and the payer (business). The due dates for submitting these forms differ for payees and the IRS, typically falling in January or February of the subsequent tax year. Keep in mind that due dates can change if they land on a weekend or holiday. In such cases, the deadline shifts to the next business day.

<strong>Deadlines for Forms 1099-MISC and 1099-NEC:</strong>

Copy A of Form 1099-MISC is due to the IRS by Feb. 28 (Mar. 31 for electronic filing) and to payees by Jan. 31.

Form 1099-NEC must be sent to the IRS and payees by Jan. 31.

If mailing 1099 forms to the IRS, you must include a transmission form, Form 1096, except for electronic filers. For specific due dates concerning other 1099 form types, refer to the chart in the IRS' General Instructions document (pages 26-28).