Various 1099 forms will start to arrive in late January and early February if you had investments, freelance income, or merchant payment activity. But what should you do if one of them overstates or understates your income, interest, annuity, or merchant payments received? What if there's a missing or inaccurate payee number or incorrect payee name?
Gather your facts. Round up evidence which the vendor, bank, or investment company representative will need to support your claim to correct the tax form. This includes account numbers, receipts, e-mails, or statements.
Expedite contact. Get in touch with the vendor or entity as soon as you discover the error and ask them to reissue the statement if they have not sent in their information to the IRS. If they have already sent their forms to the IRS, you will need to ask for a corrected form. Start with a phone call and then put your evidence in writing and send it to them via certified mail. Give the vendor a reasonable, yet concrete time-frame to correct the error.
Get written confirmation. If the vendor or entity agrees with your changes, ask for a letter from them that outlines the correction. File this letter with your tax return to help you defend against a potential audit.
No correction made? After a reasonable attempt to correct the error with no progress, contact the IRS to inform them of the failure to correct your information.
Consider an extension. If you believe a correction is on the way, you may wish to file a tax extension. Remember, you will still need to pay any tax owed by the original due date. If you do not have assurance of a correction, file your tax return with correct information and provide documentation that outlines the reporting error.