If you receive income other than W-2 wages from your job, you’ll receive a 1099 form at the end of the year. Companies and people who pay you report the income you receive to the Internal Revenue Service and to you on 1099 forms. There are 17 different types of 1099 forms, but the most common are 1099-MISC forms, which you’ll receive if you’re a freelancer or subcontractor; and 1099-R forms, for retirement plan distributions.
If a 1099 is incorrect, you have the right to dispute the amounts shown. You’re never required to report or pay tax on erroneous 1099 information. Here's what to do to resolve the issue.
Gather Supporting Proof
Gather any proof that supports your dispute. This may include check stubs, written confirmations of payments you received, such as letters or emails from the company, and proof of deposit instruments from your bank. A proof of deposit instrument is a copy of the item you deposited to your bank, such as a check or money order. This shows the amount and date of the item you deposited, as well as the name of the company or person who issued the payment to you.
Contact the Issuing Company
Contact the company that issued the 1099. If you don’t know the name of the person who paid you, ask to speak with the accounting department.
In most cases, a payer isn't required to send you a 1099 if you're paid less than $600 during the year. If this is the case, you don't need to contact the company for a 1099. Instead, simply report the amount you were paid on your tax return.
Explain the Error
Explain that you’re disputing the amount shown on your 1099. Ask the company representative to explain the amount shown so you can match the information with your records. If you still don’t agree, request a correction and offer to provide your documents as proof of your dispute.
If the company refuses to correct the 1099 by Feb. 14, call the IRS at 800-829-1040 and explain your situation. The IRS will contact the company that issued the 1099 and request a corrected form.
When You Get No Corrected Form
Use substitutions, if necessary. If the company doesn’t provide the IRS with a correct 1099, or proof of why the original 1099 is correct by April 15, you may claim the amount you believe is correct on your tax return without a new 1099.
If you’re disputing a 1099-MISC or form other than 1099-R, write a statement describing why the 1099 is incorrect and attach the statement, along with your proof, to your tax return. If you’re disputing a 1099-R, download Form 4852 from the IRS website and complete it. Most of the information you need to fill out the form is shown on your original 1099-R. Attach your documents behind your 1040 before any other schedules or forms.
Consequences of Not Disputing
If you don't dispute an incorrect 1099, you'll pay more tax than you should if the 1099 amount is higher than it should be. If the incorrect 1099 shows less than it should, and you claim the amount, you could be hit with hard underpayment penalties if the issuing company later discovers the 1099 amounts were insufficient and sends a correct 1099 to the IRS.
References
Tips
- In most cases, a payer isn't required to send you a 1099 if you're paid less than $600 during the year. If this is the case, you don't need to contact the company for a 1099, simply report the amount you were paid on your tax return.
- If you don't dispute an incorrect 1099, you'll pay more tax than you should if the 1099 amount is higher than it should be. If the incorrect 1099 shows less than it should and you claim the amount, you could be hit with hard underpayment penalties if the issuing company later discovers the 1099 amounts were insufficient and sends a correct 1099 to the IRS.
Writer Bio
With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.