The first step in the 1099 correction process is to determine whether you need to file a one transaction or two transaction correction.
- One Transaction if the original return was filed with one or more of the following error types:
- Incorrect payment amount codes in the Payer “A” record.
- Incorrect payment amounts in the Payee “B” record.
- Incorrect code in the distribution code field in the Payee “B” Record.
- Incorrect payee indicator. (Payee indicators are non-money amount indicator fields located in the specific form record layouts of the Payee “B” Record between field positions 544-748.)
- Return should not have been filed.
- Two Transaction if the original return was filed with one of more of the following error types:
- No payee TIN (SSN, EIN, ITIN, QI-EIN, ATIN).
- Incorrect payee TIN.
- Incorrect payee name.
- Wrong type of return indicator.
One Transaction Corrections
For one transaction corrections, find the incorrect tax record either in the grid view or form view in the Edit 1099 section. Make any corrections to the record, and check the corrected box.
Two Transaction Corrections
For two transaction corrections, find the incorrect tax record the grid view in the Edit 1099 section and select it. Next, click the Duplicate Record toolbar button; this will create a second record of the selected tax record. Before you click save, check the corrected check box and the second corrected check box. You can also make the needed corrections to the second record; then click save. Next, select the original tax record, zero out all of the dollar amounts, and check the corrected checkbox; then click save.
Print Corrections
To print the corrected tax forms, go to the Tax Reports section and choose the option to include only corrected returns. Next, click on the View Report button and choose the desired report.
E-File Corrections
The last step in the correction process is to generate and efile the corrected tax records. First, go to the Generate E-File Data section. You’ll then choose the tax form that contains corrected records: either the INT, MISC, or if you have corrected returns for both you can check box tax form boxes. The rest of the information should have saved from the first e-file submission (if it did not go ahead and reenter the information), so the next thing to do is to check the correction checkbox near the bottom of the form. Next, you’ll click on the generate button and the actual .txt file will be generated to the location shown in the IRSTAX file field on the form. The last step, is to submit the generated .txt file to the IRS using the FIRE system.