Businesses file millions of 1099 forms each year, and even small reporting errors can lead to penalties, processing delays, or IRS B-Notices. Below are the most frequent tax filing mistakes related to 1099 reporting and how to avoid them.
Filing the Wrong 1099 Form
Using the incorrect 1099 form type for a payment is one of the most common 1099 errors and leads to IRS filing errors.
Choosing the right form is critical because each 1099 type reports a specific category of non‑employee payments. The IRS requires accurate reporting to match income with taxpayer records.
Common form mismatches include:
- Reporting non‑employee compensation on Form 1099‑M-ISC instead of 1099-NEC
- Using 1099-NEC for rent, royalties, or prizes that belong on 1099-MISC
Key thresholds (Tax Year 2025 filing season):
- 1099-NEC: $600+ in nonemployee compensation
- 1099-MISC: Category specific thresholds (e.g., royalties of $10+, rents of $600+)
To avoid form-selection reporting errors, confirm payment type, amount, and recipient status before preparing your filings.
Missing Filing Deadlines
Missing the IRS deadline for 1099 forms is one of the most consequential tax filing mistakes, often resulting in escalating late tax filings penalties.
Key IRS deadlines:
- February 2, 2026: 1099-NEC (to IRS & recipients)
- February 2, 2026: Forms furnished to recipients (most 1099s)
- March 2: Paper filing for 1099-MISC and other 1099 forms
- March 31: Electronic filing for 1099-MISC and other 1099 forms
Penalty ranges for late submissions:
- $60 per form if filed ≤30 days late
- $130 per form if filed by August 1
- Up to $340 per form if filed after August 1
- $680 per form for intentional disregard
Creating an internal tax calendar and filing electronically helps avoid late submissions that trigger penalties. Learn more about how penalties are assessed.
Incorrect Payee Information
Errors in payee names or TINs are among the leading IRS filing errors and a major cause of rejected 1099 submissions.
This includes:
- Incorrect taxpayer identification number
- Mismatched name/TIN combinations
- Outdated vendor records
- Missing forms or incomplete fields
These data validation errors often result in IRS B-Notices, backup withholding requirements, and rework.
How to prevent incorrect TIN issues:
- Use bulk or real-time verification tools proactively
- Request updated W-9s annually
- Validate TIN/name combinations again before filing
Not Filing Corrections
Failing to correct a submitted error is one of the most overlooked compliance mistakes in 1099 reporting.
Common errors include:
- Wrong payment amount
- Incorrect TIN
- Incorrect recipient address or name
- Wrong form type
If any of these occur, you must file a corrected return with the IRS as soon as possible.
Correcting promptly prevents additional penalties and reduces the likelihood of mismatched records.
Learn more about how and when to correct a 1099 form.
How to Avoid Common 1099 Mistakes
Preventing tax filing mistakes requires preparation, accurate data, and strong validation processes. Steps to stay compliant:
- Collect W‑9-s early, ideally during vendor or customer onboarding. Learn more about why collecting W-9s upfront matters.
- Use TIN matching tools to prevent mismatched records and penalty notices. Explore why TIN matching is essential for 1099 compliance.
- Track all IRS deadlines using automated reminders. Review the full list of 2026 1099 deadlines.
- efile 1099 forms to reduce reporting errors and receive instant IRS confirmation. You can begin filing anytime with eFileMyForms – create your account to get started.
- Keep digital audit trails for all tax documents and supporting records to prepare for future audits or penalty abatements.
FAQs
What is the most common 1099 mistake?
The most frequent mistake is submitting incorrect payee information, especially incorrect TIN or mismatched name/TIN combinations. These errors cause the majority of rejected filings and IRS notices.
Can mistakes be corrected after filing?
Yes. You can file a corrected return to fix errors such as wrong amounts, wrong form type, or incorrect recipient details. If using an online platform, you can often correct forms directly in your account.
Do filing mistakes trigger audits?
While a single error typically does not lead to an audit, repeated reporting errors, missing forms, or mismatched records can increase scrutiny. Significant inconsistencies across your filings may raise IRS attention.
How can I avoid errors?
Validate payee data, choose the correct form type, file on time, and review all amounts before submitting. Electronic filing also reduces manual entry mistakes.
Does software reduce mistakes?
Yes. Filing software helps reduce tax filing mistakes by automating calculations, running validation checks, and limiting manual data entry. Platforms like eFileMyForms also flag missing information and confirm successful submissions, which helps prevent many IRS 1099 penalties caused by reporting errors.