#IRS What to do if you receive an incorrect 1099

In this gig economy, many of us receive 1099s documenting the amount of income earned from that gig. The #IRS uses 1099s as a tracking mechanism. Just as an employer documents wages earned by an employee via a w-2, the #IRS uses 1099s to insure that individuals and companies reported all income earned. Its a compliance tool. 

So what to do if the 1099 contains an incorrect amount? A bit of background first. The #IRS compares what income and expenses items that are subject to reporting requirements  against what you report on your tax return. Any difference results in a friendly letter from the #IRS with a bill. Occasionally omission results in an #IRSAudit. 

Knowing this, your first attempt should be to contact the payer and attempt to get a substitute 1099. Keep a record of your request, and keep a record of how you calculated the correct amount.  Be sure to ask them to file the correction with #IRS. 

If the payer fails to correct the amount you'll have some work to do on your return. Check a professional to determine the correct course of action. One manner is to report the incorrect amount and then a deduction to get to the correct amount. Of course, be sure to keep the correct documentation to provide to the #IRS. But do your self a favor and check in with a tax professional. Its the cheapest insurance you will buy. 

We'd love to hear from you. Drop us a line with your questions and comments at austin-tax-help.com.

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