Preparing Forms 1099-INT and 1099-DIV can be difficult, but we are here to simplify things! We have compiled this list to help ensure that you don’t make these common errors for Form 1099-INT and 1099-DIV.
To reduce errors for Form 1099, it’s important to know what these forms types are and how they are used.
What is IRS Form 1099-INT?
Form 1099-INT, Interest Income, is used by businesses or entities to report interest made to eligible recipients. They are completed for each person who has been paid interest of $10 or more during the previous tax year.
What is IRS Form 1099-DIV?
Form 1099-DIV, Dividends and Distributions, is used by banks and other financial institutions to report dividend income and other distributions such as from stock or capital gains. They are completed for each person who has been paid dividends and other distributions on stock of $10 or more during the previous tax year.
Most Common Errors for Form 1099-INT and 1099-DIV
- 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.
If so, it sounds like you are good and ready to complete and file your 1099-INT and 1099-DIV forms.
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.
When completing your forms, ensure that you don’t make these common errors for Form 1099-INT and 1099-DIV:
Leaving Out or Entering an Incorrect Tax Identification Number
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. If you provide invalid TIN information in your filing, then you may receive notices and/or penalties from the IRS.
The best fix for TIN validation issues is to catch them before you submit your filings to the IRS. 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 Wrong Year for the Forms
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 Approved Forms
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 the IRS directly, or you can use tax software, such as BoomTax, to transmit electronically to the IRS and send recipient copies via electronic delivery 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 submitting both a Form 1099-INT filing and a Form 1099-DIV filing, then you will need to generate one 1096 for the 1099-INT forms and one 1096 for the 1099-DIV forms.
Making General Errors for Form 1099-INT and 1099-DIV
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 misformatting data such as the payee name. These errors for Form 1099-INT and 1099-DIV are more common than you’d think. Using tax software such as BoomTax could help avoid or minimize such simple errors for Form 1099.
After you’ve double-checked your filings for these common errors for Form 1099-INT and 1099-DIV, you should be good to submit your filing to the IRS and any applicable states.
Once you’ve submitted your forms to the IRS either electronically or via mail and have received their “Accepted” status, then your filing obligation has been satisfied.
If you’d like a full breakdown of Form 1099-INT, take a look at our article, Mastering Form 1099-INT: The Essential Guide. Or, if you’d like more information on Form 1099-DIV, then review our article, Mastering Form 1099-DIV: The Essential Guide.
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.