What if Your 1099 is Wrong?

[Heads up: If you get 1099-MISC forms as a freelancer, consultant, or independent contractor, you might be interested in my special tax guide. Click here for more info.]

What should I do if my 1099 has the wrong amount?

Try to get the person or company who sent it to fix it. But I don’t advise you to report the corrected amount on your tax return because you can’t be sure that the IRS will get it before you file your 1040.

For your own records, you should always write out an explanation for the mistake and attach it to any bills or receipts you have to prove that your calculation of the number is actually the right one. If you get a corrected 1099, keep it in your files along with your documentation of the error.

Do NOT send this paperwork to the IRS.

The reason I recommend that you start off by reporting an incorrect number is that it will match the original 1099 that was sent to the IRS.

For a much more detailed discussion about 1099s, including what’s new for the 2011 filing season, what changes you need to prepare for in 2012, and what to do if your 1099 is wrong, click here.