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Overview

Inevitably corrections will need to be made for various reasons. Pak Accounting recommends that necessary changes be made to the data. This ensures that the data will match the subsequent extract. Manual changes can be made but are not recommended. If someone were to extract after manual changes are made, the changes will be lost.

The scenario is that you have mailed out all of your 1099s. However, a vendor or owner has come back and said the amount is not correct. You have gone into the system and made the correction. But, how do you print the form? Then, what do you send to the IRS?

1.Have you already sent your final copies to the IRS?

a.If not, your second set of forms may not need to be flagged Corrected.

b.If so, your second set of forms may need to be flagged Corrected.

2.If you did send them to the IRS, did you send them paper forms or an electronic transmittal?

a.If paper submission – review part H in the current year General Instructions for Certain Information Returns.

i.Typically, if you have already sent your paper forms to the IRS you will want to mark the Payee Maintenance as corrected and file corrected form A and 1096 with the IRS.

b.If electronic submission - see Publication 1220.

i.Typically, you will need to wait until it has been finalized.

You will need to contact the IRS for instructions on submitting a corrected transmittal file.

Corrections for all 1099 types work the same way. Some 1099 types only support printing the 1099’s while other types only support transmittal files. However, the process is the same.

 

Process

Identify the correction needed based on Error Type 1 or 2; then follow the steps to make the corrections and file the form(s).

 

Error Type 1:  Incorrect money amount(s), code, or checkbox, OR a return was filed when one should not have been filed. These type errors require only one return to make the correction. Caution: If you must correct a TIN or a payee name, follow the instructions under Error Type 2.

A:  Form 1097,1098, 1099, 3921, 3922, 5498, or W-2G

1.  Prepare a new information return.

2.  Enter an "X" in the "CORRECTED" box (and date (optional)) at the top of the form.

3.  Correct any recipient information such as money amounts and report other information as per original return.

 

B: Form 1096

1.  Prepare a new transmittal Form 1096.

2.  Provide all requested information on the form as it applies to Part A, 1 and 2.

3.  File Form 1096 and Copy A of the return with the appropriate service center.

4.  Do not include a copy of the original return that was filed incorrectly.

 

Error Type 2: No payee TIN (SSN, EIN, QI-EIN or ITIN), OR incorrect payee TIN, OR incorrect payee name, OR original return filed using wrong type of return.  Two separate returns are required to make the correction properly.  Follow all instructions for both Steps 1 and 2.

1.Identify incorrect return submitted.

a.Prepare a new information return.

b.Enter an "X" in the "CORRECTED" box (and date (optional))  at the top of the form.

c.Enter the payer, recipient, and account number information exactly as it appears on the original incorrect return; however, enter 0 (zero) for all money amounts.

2.Report correct information

a.Form 1097,1098, 1099, 3921, 3922, 5498, or W-2G

i.Prepare a new information return.

ii.Do not enter an "X" in the "CORRECTED" box at the top of the form. Prepare the new return as though it is an original.

iii.Include all the corrected information on the form including the correct TIN, name and address.

b.Form 1096

i.Prepare a new transmittal Form 1096.

ii.Enter the words "Filed to Correct TIN", "Filed to Correct Name and Address", OR " File to Correct Return" in the bottom margin of the form.  

iii.Provide all requested information on the form as it applies to the returns prepared in Steps 1 and 2.

iv.File Form 1096 and Copy A of the return with the appropriate service center.

v.Do not include a copy of the original return that was filed incorrectly.

 

NOTE:  Information above is per the Instructions for Forms 1098, 1099, and 1096 from the Internal Revenue Service. http://www.irs.gov/pub/irs-pdf/i1099gi.pdf

 

Information on how to correct an electronic 1099 see Payee Maintenance > Corrected 1099 and Corrected 1099 files.