What To Do If Your 1099 Is Wrong

It’s tough enough for freelancers to calculate and pay the taxes they owe on income from which no funds have been withheld, but even more difficult if their bosses screw up their tax info. If the company you work for incorrectly reports your income on a 1099 form, you’ll be on the hook for paying taxes on that amount unless you can set things straight.

PT Money recommends contacting your boss first about the discrepancy. Have documentation of your pay at the ready, and be prepared to be blown off if the company doesn’t want to do the necessary extra work to fix its mistake.

If that doesn’t work, you can take things to the next step. In a post about this topic last year, an accountant recommended contacting the IRS at 1-800-829-1040 with have the following info at the ready: name, address, SSN, and payment information and the name, address, and phone number of the payer. The advice also works for employers and incorrect W2s.

What To Do With An Incorrect 1099 Form [PT Money]


Edit Your Comment

  1. MrMagoo is usually sarcastic says:

    Just use White-out and a typewriter to make the corrections.

  2. DJ Charlie says:

    Sorry, but calling that 800 number is useless. No matter WHAT options you choose in their phone tree, you’ll never get a live person. Been trying to reach someone for over a week about a problem with my refund.

    And the “local” IRS office here just plays a recording saying “This office is no longer staffed. Please call 1-800-829-1040 for assistance.”

    • Cat says:

      Of course it’s staffed.

      It sound like the nightmare when INS changed all their phone numbers for local offices, and instead made you call one number. Waits went from really long to impossible, and of course, they are only there during business hours, when of course, you work. IF you finally got through, you had to work a phone tree and press buttons, very little chance of talking to a human. Worse yet, it was a TOLL CALL!

      So it became easier to drive 90 miles to the nearest INS office than trying to get through to a person. And then, you get there, and see them talking on the phone… ???

    • Michael Belisle says:

      I had to wait on hold for 20 minutes or so, I got a live person when I called. He was rather nice and helpful, even.

  3. Lyn Torden says:

    “be prepared to be blown off”

    should be: be prepared to sue

  4. mistersmith says:

    I had an employer that calculated paychecks wrong, so I was owed a few thousand dollars in back pay. They gave me a check, then sent me a 1099 for it at tax time instead of lumping it in on my W4. I did my taxes, and would have had to pay several hundred dollars because I was “self-employed,” even though I wasn’t.

    So I just took the cash, put it all in the “enter your W4 wages here” box, attached all the forms, and included a letter to the IRS saying I never should have received a 1099, that it was all salary, and if they had a problem they could contact me. That was 5 years ago, and I haven’t heard a thing.

    • RandomHookup says:

      W2. W4 is the form you fill out for withholding.

    • RandomHookup says:

      I am almost surprised, because that means the employer didn’t pay FICA on it (and neither did you). That’s one of the reasons that employers often prefer 1099 employees rather than W2.

  5. chatterboxwriting says:

    I worked for several companies last year, but one didn’t send me a 1099. They swear they did, but this is the third year in a row I didn’t get one from them. I’ve lived in the same place and had the same name for all three years. Then I contact them about the problem and they tell me it will take several weeks to send me an electronic copy. What the heck?

  6. ChuckECheese says:

    I quit working for a temp agency in November 2008. In 2010, I received a W-2 from them for about 2 days’ wages they claimed I earned in 2009. I spoke with the IRS and they made me contact the employer and copy the IRS in writing using a certain form. The agency replied a month later, “He’s wrong; he worked here in 2009.” I told the IRS that I hadn’t, but the IRS told me I should include that fake W-2 in my 2009 income anyway. I was pissed.

    • Portlandia says:

      well, did you work there at the end of 2008 and receive a final check in 2009? If this is the case, then were required to report those wages on your 2009 taxes. So, regardless of when you worked, if you were paid in 2009 those would be 2009 wages.

    • Not Given says:

      They probably accidently used your info to pay someone else. They did that when guy with a similar name to a friend signed up for the reserves. The IRS wanted him to claim it on his taxes. I do’nt know how he got it fixed but it involved the military payroll people.

  7. astraelraen says:

    Contact the 1099 issuer and see if they will change it, I doubt any would, because most just had their computer spit out 1099s and according to the computer what is on the 1099 is what they paid you.

    If you have records of what your 1099 SHOULD be, i.e. bank deposits that are GROSS deposits and not NET deposits or some other record of your gross income from that source, I would just gross the amount up or down on your schedule C.

    So if you have 10,000 in income (your records) on your schedule C and 5,000 in expenses. But your 1099 says you received 12,000 in income, put 12,000 on your schedule C and put 7,000 in expenses.

    This is of course an audit risk, that’s why you need to have GREAT documentation.

  8. webweazel says:

    One other tidbit of advice if you receive a 1099 instead of wages from a “regular” job, and think that it is not quite right, do a search on the term “SS-8 form”. Check out the information that helps you to determine the rules of independent contractor versus employee to help you understand, then fill out the form to the best of your ability. Keep it short and sweet, and add just the facts. (Fill-in forms that you can fill and print from the computer can be a tremendous help here.)

    It is a form the IRS uses to determine if you are actually an independent contractor, or an employee and the company is simply screwing you to get out of paying taxes. The company itself will also be contacted for its side of things, so no lying. The company could ultimately be responsible for back wages, additional taxes, penalties and some significant fines if they were just doing it to scam.

    An independent contractor has specific rules–owning their own tools, having income and expenses that must be calculated, ability to offer their services to other customers, having written contracts for completion of jobs, etc. If someone is a secretary who punches a clock 9 to 5, is not able to peddle their services to other companies, has no “contract” as to job terms or completion, (even if verbal) and gets paid solely on 1099, they can most likely get a determination in their favor, and file amended returns for those years and get a significant chunk of change returned to them from the IRS.

  9. PortlandBeavers says:

    The thing to remember is that the company is required to send you the form by the end of January, but isn’t required to report to the IRS until the end of February. So look it over as soon as you get it. If you contact the issuing company early enough, they may not have reported to the IRS yet and you may be able to get things corrected before the IRS even gets the information. That is, assuming you get a helpful employee at the company.