One of the most important activities you must complete when year-end planning is "information return." Information return filing is a special form with its own rules. If not done properly, it can leave you subject to various penalties and more reporting issues. So, if you're forming these information returns, specifically the 1099 form, there are common mistakes that you may run into that others do.

To help you be aware of the mistakes and also help you correct them in case you made the same mistakes, we want to share with you common Form 1099 filing mistakes and how to fix them:

Mistake 1. Failing To File By The Due Date

This is a common mistake that many business owners make. They wait until the last minute to file their information returns. Then they end up missing the deadline.

The IRS requires businesses to file their information returns be filed by January 31 of the next year, specifically for the 1099-NEC, regardless of whether you're filing with paper or through digital means. The rest of the 1099s are due February 28. If you're late, you pay the price, so really, the best way to avoid this issue is to start filing early so that you have some time to fix any issues before filing it.

Mistake 2. Reporting The Wrong TIN Or Not At All

In the rush of things or simply an oversight, business owners may end up using the wrong TIN (Taxpayer ID Number) or outright forgetting to include it in their forms.

To avoid this kind of issue, always keep a reminder to include your TIN. Also, you can visit the IRS website to verify the TIN to see if the number matches IRS records. This applies well to any documents you receive from your vendors, where you can run their TIN numbers to ensure the TIN you're given is correct. 

Also, apart from checking the TIN, also make sure the correct name for the TIN is being received. Sometimes, you will receive a Social Security number but also the DBA (entities doing business) as a name instead. This is incorrect because the IRS wants the person's name.

Mistake 3. Using The Wrong Boxes In The Form

Even if using the right forms, there's still the mistake of using the wrong boxes that can ruin one's effort to fill out the form properly.

When filling out your form, always make sure what the box needs. The IRS will always employ several boxes in different ways. The income you state will be treated differently depending on the box it is written in, and this can lead to different tax rates and such that you may be wrongly subjected to because of your mistake.

Conclusion

There are many other mistakes you can make when filling out your 1099 forms, but generally, these things happen when you aren't paying enough attention. So, the next time you are filling out your form, start early and take your time. While it is quite a bit of work, filling out these forms is vital if you want to ensure your business is running legally and, most importantly, without facing any penalties that can hurt you.

Do you need help filling out your year-end tax forms? Tottax is a tax and accounting agency in Denver that can help you solve your accounting issues! Work with us today and get your 1099 tax returns done the right way.