How to deal with errors on Form 1099 NEC? Does the IRS reject your 1099 NEC Form? Have you e-file or paper file Form 1099 NEC? If you have an e-file information return, then it is easy to correct errors and transmit them to the IRS in minutes.
Getting tensed? Don’t worry! You can correct 1099 information returns online even if you have submitted tax returns through paper. We will let you know how to deal with errors on Form 1099 NEC. Moreover, you can find out the reasons behind the rejections of 1099 Tax Forms. Finally, correct Form 1099 NEC online within a few steps.
What Form to use for 1099 corrections?
In general, employers use Form W-2c to correct errors that occur on the W-2 Form. But there is no specific form for each 1099 Form to correct errors. Furthermore, when you’re correcting Form 1099 NEC through appearing forms, ensure to check “CORRECTED” which is on top of the Form. Remember, if you forget to check the “CORRECTED” box, the IRS considers it as a duplicate filing information return. Moreover, you may have a chance to face IRS penalties. When it comes to correcting 1099 NEC online, simply select “1099 corrections”. Review and submit the amended form to the IRS online easily.
When to file Form 1099 NEC corrections?
In general, not all the errors occur on Form 1099 NEC requires a correction form. If you notice any one of the below-listed mistakes, you should complete the correction form and transmit it to the IRS.
Incorrect details of the payer or payee
Suppose, if you enter invalid information of the payer or payee, then you need to correct the error. Invalid information includes the name, SSN, or TIN of both the payee and payer.
Reporting incorrect amount
As we know, contractor reports their 1099 income to the IRS on the tax return forms and the IRS matches the tax return with 1099 Form information. If you report an incorrect amount on Form 1099 NEC, the IRS may impose penalties for fraudulent filing. So, before reaching the deadline you need to correct the error to get relief from IRS penalties.
Wrong returns filed for the payee
For instance, if you paid a contractor $600 who works as a web designer for your business, you need to file Form 1099 NEC. If you report the amount by filing Federal 1099 MISC, then the IRS rejects the form notifying the payer that wrong returns are filed.
What are the common errors in Form 1099 NEC?
Given below are some of the errors which not only require correction form but also lead to IRS penalties:
Filing an unapproved Form
To file 1099 information returns with the IRS you must get the approved forms from the IRS offices, or a business tax preparation software. You cannot use the downloaded form to file the 1099 NEC Tax Form. As mentioned earlier, red ink on Copy A of the Form is a special link that cannot be duplicated by the color copier.
Making form errors
This includes failing to include decimals and cents on amounts, making entries too light or too large, misformatting employee names, etc.
Misclassifying the individual
The most common error which leads the IRS to reject your information return is due to misclassifying the individual. Before filing Form 1099 NEC ensures to identify the individual as an employee or a contractor.
IRS penalties for 1099 NEC Errors
In general, some errors which occur when filing information returns are easy to fix and others are not. Moreover, the IRS penalizes depending on the size of the business, type of failure, and late filing information returns. Given below are some of the errors that have penalties:
- Not filing the 1099 NEC Form within the deadline i.e., by January 31st every tax year.
- Filing 1099 NEC through the paper when you’re required to file electronically.
- Reporting an incorrect Tax Identification Number of the payer or payee.
- Paper filing 1099 NEC Tax Form which is not readable by the IRS machines.
- Not issuing tax returns to the individual who should get one.
- Filing form without including required business information of the payer.
How to correct Form 1099 NEC errors online?
Generally, correcting Form 1099 NEC errors online is a simple and convenient way. Within a few steps, you can erase the mistakes which have occurred on Form 1099 NEC. Follow the below steps to correct errors online:
- Log in or sign up for free with an IRS-certified e-file provider.
- Existing users can choose Form 1099 NEC that they wanted to file.
- Enter the corrected information on the form.
- Double-check the information and send the amended form to the recipient.
- Review and transmit the corrected Form 1099 NEC to the IRS before meeting the deadline.
Form 1099 Online is the best way to submit 1099 Tax Forms online. We provide e-filing for 1099 MISC, Form 1099 NEC, 1099 DIV, 1099 INT, 1099 A, Form 1099 K, and 1099 R conveniently and comfortably.