Preparing Forms 1099-MISC can be difficult, but we are here to help simplify things! We have compiled this list to help ensure that you don’t make these common errors for Form 1099-MISC.
So, you have already:
- Determined who must receive a Form 1099-MISC,
- Collected your business taxpayer information,
- Sent for and retrieved your payee information through a completed W-9 form,
- And finalized and collected the payment amounts from your accounting system.
If so, it sounds like you are ready to complete and file your 1099-MISC 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 errors for Form 1099-MISC that may result in potential penalties or other problems.
Most Common Errors for Form 1099-MISC
When completing your forms, make sure not to make these common errors for Form 1099-MISC:
Sending a Form 1099-MISC to an Employee or an Independent Contractor
Form 1099-MISC is used to report certain certain miscellaneous income, such as rents, prizes and awards, fishing boat proceeds, and other income payments.
Employees receive Form W-2, Wage and Tax Statement, for their wages and salaries received during the course of their employment. Independent contractors, or nonemployees, should receive a Form 1099-NEC, Nonemployee Compensation, for the income earned during the course of their work.
Leaving Out Tax Identification Numbers
If you fail to provide a taxpayer identification number (TIN) on your submitted 1099-MISC form, the reported taxpayer could be subject to backup withholding. You can request the recipient’s TIN using a W-9 form.
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.
In addition to the signed W-9 form, you can utilize tools like TINCorrect to double-check that the information provided is corroborated with the IRS. TINCorrect can also be used to verify payer information.
Using the Wrong Year for the Forms
As with all tax reporting forms, you should make sure you are completing the 1099-MISC forms for the correct tax year, which is the year the payments were made, NOT the year in which you are preparing the forms.
Starting in tax year 2022, the IRS Form 1099-MISC will not have the calendar year/tax year printed on the form itself. It will have a box to add in the year. Be sure to include the correct tax years when preparing your forms!
Not Using the Approved Form
There are several ways to acquire approved paper Forms 1099-MISC for filing. You cannot simply download the Form 1099-MISC 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 Summary Form
Form 1096 is the transmittal form, or summary form, for paper Form 1099 Series reporting and other information returns. An individual Form 1096 is required for each type of information return you are filing. For example, if you are filing Forms 1099-MISC and Forms 1099-R, then you will need to generate one Form 1096 for the 1099-MISC filing and one Form 1096 for the 1099-R filing.
Making General Form Errors
Completing the 1099-MISC 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-MISC are more common than you’d think.
E-filing using an authorized Form 1099 software provider could help avoid or minimize simple errors like the ones listed above.
After you’ve double-checked your filings for these common errors, you should be good to submit your filing to the IRS and any applicable states.
Once you’ve submitted these forms to the IRS either electronically or via mail and have received their “Accepted” status, then your filing obligation has been satisfied.
Download our Form 1099-MISC vs Form 1099-NEC Comparison Guide to learn more about the differences of these form types.
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.