corrected 1099s can cause IRS problems?

Discussion in 'Professional Trading' started by DataCruncher, Mar 27, 2008.

  1. I just found out that a 1099 received from my bank is incorrect. I was going to tell the bank to send a corrected 1099 to me and to the IRS. I was doing some google searching on this and I came upon a passage in an article that has got me worried:

    "A big mistake most people make is to send the payees and the IRS their copies of the 1099s all at the same time, in January. This ends up causing very big problems if there is an error, especially when the amounts are overstated. What then happens is that a corrected 1099 is sent to IRS, with the tiny "Corrected" box marked. The problem is that IRS computers almost never see that box. Instead they see two 1099s and expect the payee to report the amounts on both. "

    Does anybody have experience with this? Will having corrected 1099s sent in only a couple weeks before the upcoming 4/15 tax deadline cause complications for me?
  2. so has anybody had a problem with corrected 1099s, where the IRS computers think that you owe the money on the old 1099 PLUS the money on the new 1099? apparently this article is saying that the IRS computer don't see that the "correction" box has been checked on the new 1099. damn, when are they going to upgrade the IRS computers?
  3. C99


    The way this reads to me is that the mistake is on the 1099 sender's end, not recieving end. So as the reciever, this mistake is beyond your control. 1099 are due to employees by jan 31 but corp tax returns are due either 3 /15 or 3/31 , not sure. so companies could send them out, wait a month for recievers to catch any errors and correct without irs involvement and all completely on time. instead, many companies send to both employees and irs at end of jan and then have to correct in both places thus increasing chance of irs error in adding both 1099s instead of substituting.

    i'm no cpa, but my advice would be to get correct forms and file correctly. a minor discrepency will not trigger audit, if the 1099 generates questions they will be adressed specifically by irs and such situations are easy to resolve.
  4. what firm are you with that gives you a 1099?
  5. If it were me, I would make a simple little note and include it with the return explaining how you got two of them.

  6. if you're a retail trader you receive 1099s.

    the note idea is interesting except there is no way I know of to do that in TurboTax
  7. does anybody use TaxAct software? how does it compare to TurboTax? Does it allow you to append notes to your taxes?