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Quick question on correction of 1099-misc


jklcpa
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Client received 2 forms 1099-misc for ~ $70K each from same payer, exactly $1,000 different from each other in amount.  When I inquired which was correct, payer said one was marked "amended".   Apparently, the payer tried to correct the amount but failed to mark the "corrected" box on the latter. Just wonderful.

My question is if the payer issues another 1099-misc marked "corrected" on it, will this negate both of the other two in the IRS system, or just how is this fixed now since there were two of them?

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Wow, that's a good question.  There are two forms out there NOT marked corrected, and I guess the only thing IRS could assume is that they are both correct.  One corrected form COULD take care of it, but I'd guess it won't.  I'd guess IRS will question taxpayer for sure, since that's where the money comes from.  Getting a letter from the payer sounds like a great idea!

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Payer told my client that both were filed with IRS and said one was marked "amended".  I understand that it's easy to miss the box, but I already told my client that the IRS will be adding the two amounts together. I sent him a pdf of the two forms so that he can forward back to the payer.

These two forms were filled in by hand. Ugh!

I've already suggested getting a letter from the payer to use down the line when the CP2000 arrives.

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3 minutes ago, BHoffman said:

For some reason, I'm always suspicious of hand written forms and wonder whether the payer actually submitted them to IRS or not.

Just had a pick-up on Friday and the guy asked if he needed to mail in the 1099's he wrote out for a contract worker.

Another client hand writes out W-2s. He had the W2s in his tax file to me and I noted the copy to be submitted to the state was in there. He admitted he had never mailed in those copies before.

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2 minutes ago, BHoffman said:

For some reason, I'm always suspicious of hand written forms and wonder whether the payer actually submitted them to IRS or not.

 

I am wary also. Payer told my client they were both sent.  I suppose one small glimmer of hope could be that only the correct one was filed, or that the second actual red form may have had the "corrected" box checked, but I doubt that. They were on the carbonless forms with the tractor feed edging.

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I don't know why I just thought of this, because I've said it to people a dozen times.  I would enter the sum of the two 1099s as gross income and on the back of Sch C, subtract the incorrect amount with an explanation:  "1099 issued in error and not corrected."  IRS computers will be happy, and I bet you don't hear a peep.  (I'm assuming sole proprietor; adjust for your situation.)

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  • 3 weeks later...
On ‎4‎/‎18‎/‎2016 at 0:51 PM, jklcpa said:

Client received 2 forms 1099-misc for ~ $70K each from same payer, exactly $1,000 different from each other in amount.  When I inquired which was correct, payer said one was marked "amended".   Apparently, the payer tried to correct the amount but failed to mark the "corrected" box on the latter. Just wonderful.

My question is if the payer issues another 1099-misc marked "corrected" on it, will this negate both of the other two in the IRS system, or just how is this fixed now since there were two of them?

This is a few weeks late because I just noticed this post, but I was wondering what you did about this.  I've had a couple of similar cases over the years and was curious.   Thanks.

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2 minutes ago, BLACK BART said:

This is a few weeks late because I just noticed this post, but I was wondering what you did about this.  I've had a couple of similar cases over the years and was curious.   Thanks.

Client got back to me late last week with the final pieces of other information so I haven't yet finished the returns.

Bookkeeper that prepared the 1099s insists that the box was marked as corrected on the red filing copy for the 1099 reporting the lower of the two amounts. She provided us with the payer's copy that shows the box as being marked, but it was blank on the recipient copies. She would have marked it after taking the copies apart.  Client and I don't really believe her. 

I guess they'll be waiting and hoping that they don't receive a notice.

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1. This is not a ""Quick question".  That would be on sentence with a Yes/No answer.

2. I agree with Rita on this as I have used this method many times.  I call it "offset to correct erroneous 1099MISC"

3. I do no agree with Pacun as the IRS doesn't decide which one to use until after the fact when  issuing a CP2000.

4. Sometimes these things can be resolved by pulling the Wage  Income transcripts.

BTW, I've seen many duplications of 1099MISc and SSA-1099's.  Either these are rejected by the computer or done manualy when income matching is done.

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19 hours ago, jklcpa said:

Client got back to me late last week with the final pieces of other information so I haven't yet finished the returns.

Bookkeeper that prepared the 1099s insists that the box was marked as corrected on the red filing copy for the 1099 reporting the lower of the two amounts. She provided us with the payer's copy that shows the box as being marked, but it was blank on the recipient copies. She would have marked it after taking the copies apart.  Client and I don't really believe her. 

I guess they'll be waiting and hoping that they don't receive a notice.

Thank you.  I think most of the above are pretty good suggestions to work around the problem.  The wild card, as you say, in these cases is the clerk of whom you have no idea what they actually sent. 

I once had one that wrote "AMENDED" at the top of a 1099-MISC (without checking the "CORRECTED" box) and the client was never billed.  However, that was many years ago and I'm guessing a good agent realized what she meant and therefore cancelled the first submission -- can't speak for the CSR's nowadays.  The agonizing thing about these, of course, is that you generally have to wait until summer of the next year before a notice is sent. 

The other case was a HUD agency who issued an incorrect 1099 money amount.  The clerk said she didn't know how to fix it; I offered to either show her how or to do it for her but she refused saying "It has to be done or authorized by a HUD official."  And that was that - they did nothing.  But it was also a non-event since the landlord had enough rent income listed to cover the HUD payments and more; back then they didn't send a notice if your TOTAL rent income was sufficient.  She never got a CP letter.

The upshot of it was that in the process I discovered this little booklet that neatly covers the correction methods.  The title is "General Instructions for Certain Information Returns" (type that into Google and an IRS PFD will come up -- I tried to make a link of it below, but I don't know how and can't get it to work). Anyway, Google those words and take a look at page eleven: There are two types of error corrections. Method #1 is for money amounts and only requires ONE form.  Type in the new money and check the "CORRECTED" box; this cancels the old 1099 money and substitutes the new money amount.  Method #2 is for names and ID/SS numbers and requires TWO forms.  On the first 1099 you type all the text information just as was originally and mistakenly done, but you enter a ZERO on the money amounts.  Then check the "CORRECTED" box.  This will cause the old form to no longer have any effect.  Next, you simply type up a new 1099 just as if you were doing it correctly for the first time (DO NOT check the "CORRECTED" box).  (Theoretically this all works out ;)).

https://www.irs.gov/pub/irs-pdf/i1099gi.pdf

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1 hour ago, SaraEA said:

I have a client who every year brings me the copies of his 1099MISC--including the red copy.  Hmm...to report or not report?  (I do, of course.)

I've had a few of those over the years too, but now I have a few people (mostly non-clients) coming by to ask for a blank 1099 or W-2 (I order a few from IRS to give away).  Asked if they want a 1096 transmittal to go with it they almost invariably say "No thanks, I don't need that."  I'm assuming they either don't know/care what should be done or that they just want to hand somebody an official piece of paper to satisfy them.  In any case I'd bet that IRS/SSA never sees the red sheet. 

    

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The General Instructions regarding "Void" that BlackBart refers to are for use when preparing (typing/writing)the sheets of 1099's in sequence and an error is made on one of them.  It's not for  correcting a file form.

BTW, the link works.

 

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6 hours ago, Max W said:

The General Instructions regarding "Void" that BlackBart refers to are for use when preparing (typing/writing)the sheets of 1099's in sequence and an error is made on one of them.  It's not for  correcting a file form.

BTW, the link works.

 

     I disagree.  On page nine, Section H, of the booklet it states "If you filed a return with the IRS and later discover you made an error on it, you must:

. Correct it as soon as possible and file Copy A and Form 1096 and

. Furnish statements to recipients showing the correction...

CORRECTED checkbox. Enter an "X" in the corrected checkbox only when correcting a form previously filed with the IRS or furnished to the recipient.  Certain errors require two returns to make the correction.  See Filing corrected returns on paper forms below to determine when to mark the "CORRECTED" checkbox..." 

     Yes, the link does work after all (I couldn't get it to do so when typing the post). 

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The General Instructions regarding "Void" that BlackBart refers to are for use when preparing (typing/writing)the sheets of 1099's in sequence and an error is made on one of them.  It's not for  correcting a file form.

BTW, the link works.

No, we agree. For some uknown reason, I brought up "Void", but that wasn't anything that you mentioned.  

 

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On ‎5‎/‎8‎/‎2016 at 2:21 PM, jklcpa said:

...Black Bart continues to refer to the CORRECTED box, which BTW I already knew about, and know how to correct a 1099 and how to void one too.

 

Sorry for the perceived slight; I did not mean to imply that you (I note you're a Moderator well-versed in taxes) need any 1099 basic training from me.  It's just that, for me at least, this situation is an infrequent occurrence (years in between) and when it DOES come up, I generally have to go look that booklet up because I always recall there are "sometimes one form required & sometimes two." Besides it's one of the few IRS instruction booklets that I find plain and clear with a quick desired result.  I like to read it and thought others (if they had not already done so) might too.

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4 hours ago, BLACK BART said:

Sorry for the perceived slight; I did not mean to imply that you (I note you're a Moderator well-versed in taxes) need any 1099 basic training from me.  It's just that, for me at least, this situation is an infrequent occurrence (years in between) and when it DOES come up, I generally have to go look that booklet up because I always recall there are "sometimes one form required & sometimes two." Besides it's one of the few IRS instruction booklets that I find plain and clear with a quick desired result.  I like to read it and thought others (if they had not already done so) might too.

I didn't take it as a slight at all, and there are many times I also write my answers to address a wider audience than to only the one posing the question.  I was simply trying to end the disagreement between you and MaxW over the voiding, which isn't part of my client's problem and which you never brought up. 

As for the moderator part, I'm not any more special here than any other tax preparer, but I do have more editing and monitoring functions at my disposal for the good of the forum.

 

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17 hours ago, jklcpa said:

As for the moderator part, I'm not any more special here than any other tax preparer, but I do have more editing and monitoring functions at my disposal for the good of the forum.

Understood --- BUT -- with exceptions /// your knowledgeable answers, willingness to help, soft-slaps - to keep us on course /// minimum HARD slaps when we get ornery along with almost being here "always" make just some of the specials ---/// not to even mention those soft fluffy ears ///// Be well, keep enjoying.

 

By the way, on the almost always here???? if you read the sequels to "enders game" they finally share that the "voice" ender has in his head (and always there/everywhere) is a super computer or entity (I have not figured out exactly which)  ---- any relation?????   :mellow:

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