Form 1099 is an Internal Revenue Service (IRS) form that taxpayers use to report specific types of payments. There is an entire series of these informational returns identified by letter, ranging from Form 1099-A through Form 1099-SA. However, business owners will commonly use Form 1099-MISC to report money paid to independent contractors.
Form 1099-MISC includes information about your business and the independent contractor you paid. If an error is found in the information provided, you must make a 1099 correction as soon as possible. Revised forms must be submitted to the IRS, state agencies, and the independent contractor.
How to correct Form 1099-MISC
To correct a 1099-MISC form after it has been filed, first identify the type of error as Type 1 or Type 2:
- A Type 1 error is an incorrect dollar amount, payee name, or code.
- A Type 2 error is a missing or incorrect taxpayer identification number or an invalid address reported.
Then, follow these steps to correct the erroneous information (all directions apply to both types of errors unless otherwise specified.)
- Confirm the type of the error.
- Reference the original 1099-MISC when preparing the correction. Correct information must be included exactly as it was on the original form.
- Obtain another Form 1099-MISC from the IRS. Do not use the online version, as it will not be accepted.
- Obtain another Form 1096 from the IRS. This is a cover sheet summarizing 1099 information. One 1096 will be required for every 1099-MISC you correct.
- Enter the corrected information on the 1099-MISC, and check the “corrected” box at the top of this form. This tells the IRS that the form was previously filed.
- For a Type 1 error, provide the corrected information, then input the rest of the information exactly as it was reported originally.
- Type 2 errors do not allow for correction of any reported dollar amounts. Information should be corrected for a Type 2 error, but dollar amounts submitted on this corrected return should contain zeros only.
- Complete Form 1096 with corrected information.
- Mail the corrected copy to the independent contractor, to the IRS (using the address provided with the form instructions), and any required state tax departments.