This article gives an overview of 1099 forms and the process for correcting them and reporting the corrected payments.
When Do Businesses Issue a Form 1099?
Small businesses issue several types of 1099 forms to report taxable payments to various businesses and individuals. The most common types of 1099 reports are:
Form 1099-NEC for non-employeesForm 1099-MISC for miscellaneous types of paymentsForm 1099-DIV for report dividends and other distributions to shareholdersForm 1099-INT for interest paymentsForm 1099-R for distributions from retirement plans, profit-sharing plans, pension plans, and more
The IRS calls 1099 forms and similar forms “information returns.” Some requirements are common to all these forms, while other requirements differ based on the form. Forms 1099-NEC and 1099-MISC are the most common forms for small businesses. Form 1099-NEC is used to report payments to non-employees who provide services to the business. These individuals include freelancers, gig workers, independent contractors, attorneys, and other professionals. Form 1099-MISC reports several different types of payments, including royalties, rents, prizes, awards, and other income payments.
Where Do You Send 1099 Forms?
Each 1099 form has several copies:
Copy A for the IRSCopy 1 for state tax agency (if the state requires income tax)Copy B for the recipient (payee)Copy 2 for the recipient, for their state income tax returnCopy C for the payer (your small business)
The due dates are different for payees and the IRS depending on the form. Each due date is for either January or February of the year following the tax year.
Deadlines for Forms 1099-MISC and 1099-NEC
Here are some important deadlines to remember for 1099-MISC and 1099-NEC forms:
Copy A of form 1099-MISC is due to the IRS on Feb. 28, or Mar. 31 if filed electronically, and due to payees by Jan. 31.Form 1099-NEC is due to the IRS and to payees by Jan. 31.
If you are mailing 1099 forms to the IRS, you must include a transmission form, Form 1096; you don’t need this form if you are filing electronically. For due dates for other types of 1099 forms, see the chart on pages 26-28 of the IRS’ General Instructions document.
Filing State 1099 Reports
While some states require you to submit a copy of 1099 forms for state income tax purposes, many do not because they participate in the Combined Federal/State Filing Program. Check with your state’s tax agency to see if it participates in this program.
Filing Electronically
You can file most types of 1099 forms electronically using the IRS Filing Information Returns Electronically System (FIRE System) if you have the proper software. You can also mail 1099 forms to the IRS directly, or you can use one of the IRS-approved private delivery services. The mailing address depends on your business location. See page 7 of the IRS’ General Instructions document for a list of current mailing addresses.
Correcting Common 1099 Filing Errors
The IRS has procedures for filing corrected paper returns or returns filed electronically.
Correcting Paper Returns
Type 1 errors are for incorrect money amounts, codes, or checkboxes, or if a return was filed when it didn’t need to have been filed. To make the correction, follow these steps: Type 2 errors are for a missing payee name or a missing or incorrect payee taxpayer identification number (TIN). Here are the steps for Type 2 corrections:
Filed to Correct TINFiled to Correct NameFiled to Correct Return
File Form 1096 and Copy A of the return with the IRS Submission Processing Center designated for your state, but don’t include a copy of the original incorrect return. For more details on this process, see the chart on page 12 of the IRS’ General Instructions document.
Correcting Electronically Filed Returns
If you find an error in an electronically filed 1099 form, you must file a corrected return. Don’t file the original form again, and file only the specific returns that were in error. If you omitted a return from a previous filing, file it as an original return. To report a missing or incorrect taxpayer ID number (TIN), you must write to the IRS and include:
Name and address of payerType of errorTax yearPayer TINTransmitter Control Code (TCC)Type of returnNumber of payeesFiling method (paper or electronic)Whether federal income tax was withheld
Send the letter to: Internal Revenue Service Information Returns Branch 230 Murall Drive, Mail Stop 4360 Kearneysville WV 25430 There are specific procedures for correcting one-transaction and two-transaction errors on the FIRE system. Check with your tax professional for help with this process.
What If You Receive an Incorrect 1099?
If you received an incorrect 1099-MISC or 1099-NEC form, notify the payer immediately to explain the error and request a new form. If you don’t receive a new 1099 before the time you’re required to file your tax return, check with a licensed tax preparer to see how to deal with the incorrect form. The IRS doesn’t set a specific deadline for correcting tax forms, but an amended tax return (Form 1040-X) must be filed within three years after the date of filing of the original return or within two years after the date the tax was paid. There are three designated 1099 submission processing centers for specific states. See page 7 of the IRS’ General Instructions document to find out where to send your corrected forms.
