Now is the time you will start receiving year-end informational tax forms. We’re all fairly familiar with W-2s from our employer, but you will also probably receive a number of different 1099s. Make your tax filing experience smooth this year by staying on top of these informational tax returns. Here are some tips.
It is early February and you realize the 1099-MISC or NEC you receive is in error. In fact, it overstates your income by $2,000. What should you do?
Gather your facts. Put yourself in the shoes of the vendor, bank or investment company representative. Gather evidence they will need to support your claim to correct the tax form. This includes receipts, e-mails, and statements. Have your account number handy as well.
Contact the vendor. Contact the vendor as soon as you discover the error and ask them to reissue the statement if they have not sent in their information to the IRS. If they have already sent their forms to the IRS, you will need to ask for a corrected form. Start with a phone call and then put your evidence in writing and send it to them via certified mail. Give the vendor a reasonable, yet concrete timeframe to correct the error. You do not want to wonder when a correction is coming, so keep control of the timing for correction if at all possible.
Written confirmation. If the vendor agrees with your change, ask for a letter from them that outlines the correction. File this letter with your tax return to help you defend against a potential audit.
Tell the IRS. After a reasonable attempt to correct the error with no progress, contact the IRS to inform them of the failure to correct your information.
File an extension? If you believe a correction is on the way, you may wish to file a tax extension. Remember, you will still need to pay any tax owed by the original due date. If you do not have assurance of a correction, file your tax return with correct information and provide documentation that outlines the reporting error.
If you have more questions on the employer side of issuing 1099s, take some time to view Alloy Silverstein’s webinar recording on 1099 compliance. For assistance this tax season in completing your return accurately and efficiently, request an appointment with an Alloy Silverstein accountant and advisor today.
December 20, 2022 · Best practices to meet 1099 requirements and deadlines. Minimize your stress and risk of penalties by making sure your business’s Form 1099 process is compliant, streamlined, and up-to-date before the upcoming filing deadline. Presented by Julie Strohlein, CPA and Chris Cicalese, CPA, MSTFP.
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