IRS 1099 Filing Mistakes Made by Small Businesses


Critical errors can happen to any small business owner, especially when it comes to tax filing, that’s why before sending 1099-MISC Forms to your independent contractors and the IRS review these common W-2 filing mistakes. Check out these typically IRS 1099 filing mistakes made by small businesses.


IRS 1099 Filing Mistakes Made by Small Businesses


Using the Wrong Form

Use the 1099-MISC Form for the year payments were given to recipients, not the year you are filing. So independent contractor payments made in 2017 will be reported on 2017 1099-MISC Forms. These forms must be provided to non-employees and filed with the IRS by January 31st, 2018.


Using Unapproved Forms

You cannot simply download a 1099-MISC Form, print, and file with any online location.


Copy A of Form 1099-MISC  is sent to the IRS. This should be printed on a laser-scannable red form. You must file with approved forms to avoid filing penalties. When you generate 1099-MISC Forms or e-file using ExpressEfile, you can rest assured that all of your required forms are generated correctly.


Filing 1099-MISC For Employees

Your employees must receive a W-2 Form reporting their wages and tax withholdings for the previous fiscal year. 1099-MISC Forms are only used to report non-employee compensation for contracted work for your business. If you are confused about the classification of your workers, check with your tax advisor.


Filing Incorrect Payee Tax ID Numbers

Do not leave the section for payee tax ID number blank. If you do not provide an ID, the taxpayer will be subject to backup withholdings.


But don’t let the term FTIN (Federal Tax Identification Number) confuse you. Social Security Numbers and EINs are federal tax ID number for individuals taxpayers and contractor/business entities.


Failing to Include Transmittal Form

Transmittal Form 1096 is a summary of the information found on all 1099-MISC Forms. Form 1096 must be included when paper filing Form 1099 with the IRS. If you paper file and fail to include this form your submission will be rejected, and you will incur a penalty.


You, the employer, will need to submit a separate 1096 for each type of 1099 series return your transmit.


Common Form Errors

Here are the most common form errors small business owners make:

  • Failing to include cents and decimal amounts
  • Failing to use black ink
  • Not using IRS required 12 pt. Font Courier type font
  • Mistyping employee names or mis-formating name in wrong boxes


How to Avoid W-2 Form Mistakes?

You can directly e-file your non-employee 1099-MISC Forms today using ExpressEfile, the IRS-authorized e-file provider. We meet all strict security guidelines set by the IRS. ExpressEfile uses secure encryption technology to protect your tax and business information. Plus, upgrading from paper-filing to e-filing is just $0.99 per form, and our tax software helps you avoid mistakes by automatically checking for errors.


With our E-filing and Postal Mailing add-on, you can avoid the tedious task of mailing your recipient forms. We will send all recipient copies on your behalf the following business day from our Rock Hill, SC office. Upgrade today for just $2.29 per form.


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