- Determined who must receive a Form 1099-INT and Form 1099-DIV;
- Collected your payer information;
- Collected your payee information;
- And finalized and collected the amounts to be reported.
However, before you press that print or e-file button, take a moment to review your information and forms for accuracy in order to avoid potential penalties or other problems.
Some common mistakes when completing Form 1099 are:
Leaving out tax identification numbers.
If you fail to provide a taxpayer identification number (TIN) on your submitted 1099 form, the reported taxpayer could be subject to backup withholding.
You will also want to verify that the recipient’s TIN is correct. You can utilize tools like TINCorrect to double-check that the information provided for both the payer and payee is corroborated with the IRS.
Using the form for the wrong year.
As with all tax reporting forms, you should make sure you are completing the 1099 forms for the correct tax year, which is the year the payments were made; NOT the year in which you are preparing the forms.
Not using the approved form.
There are several ways to acquire approved 1099 paper forms for filing. You cannot simply download the Form 1099 from the IRS form hub, copy, print, and send it. Copy A, which is sent to the IRS, uses a special red ink that cannot be duplicated by a copy machine.
You can order or purchase paper forms from an office supply store and the IRS directly, or you can use tax software such as BoomTax to transmit electronically to the IRS and send recipient copies via e-mail or paper mail.
Failing to include a transmittal form.
Form 1096 is the compilation report for paper Form 1099 Series reporting and other information returns. An individual 1096 compilation is required for each type of information return you are filing. For example, if you are filing 1099-INT and 1099-DIV forms, you will need to generate one 1096 for the 1099-INT forms and one 1096 for the 1099-DIV forms.
Making general form errors.
Completing the 1099 forms on your own could result in simple errors such as using ink that is too light, forgetting decimal points, inserting font that is too large or too small, or mis-formatting data such as the payee name.
Using tax software such as BoomTax could help avoid or minimize such simple errors.
Need More Information?
For more information on Form 1099 filing, check out our other blog posts linked below:
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BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.