It’s now February, and you realize the Form 1099 you received is in error. In fact, it overstates your income by several thousand dollars. What should you do? You must review and correct your 1099 forms immediately.

How to correct your 1099

• 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, emails, and statements. Have your account number handy as well.
• Contact the vendor. Contact the vendor when you discover the error and ask them to re-issue the statement or provide a corrected form. Start with a phone call, then put your evidence in writing and send it to them via certified mail. Give the vendor a reasonable yet concrete time frame to correct the error. You do not want to wonder when a correction is coming, so keep control of the timing for a correction if possible.
• Written confirmation. If the vendor agrees with your change, ask them for a letter outlining 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 must still pay any tax owed by the original due date. If you do not have the assurance of a correction, file your tax return with the correct information and provide documentation that outlines the reporting error.

If you need assistance

Vendors are not perfect. What should you do when you receive an error on a tax form? Feel free to contact our RRBB advisors for more information or if you have any questions.