Thousands of 1099 and W-2 files are rejected each year for issues that are easily preventable through upfront checks and cleaner data practices. Whether filing through FIRE or IRIS, following these 10 steps will help you reduce errors, avoid penalties, and keep your reporting process running smoothly.
How to Avoid 1099 Rejects:
1) Verify Taxpayer Identities Before Filing
Validate all Name/TIN combinations early, ideally before issuing payments.
This early step helps you catch the most common reason files fail IRS validation.
Tip: eFileMyForms has built-in TIN matching so you can verify Name/TIN combinations instantly.
2) Require Complete and Validated Tax Forms from Every Recipient
Make it standard practice to collect accurate W-9 or W-8 forms before onboarding payees.
Correct forms ensure you have the right taxpayer details from the start.
Learn the importance of collecting a W-9 in our blog
3) Clean Up and Standardize Naming Conventions
Normalize how names appear across your systems to avoid mismatches.
Watch for formatting issues like missing suffixes, transposed names, or special characters that the IRS cannot process.
Did you know? – Name formatting errors can cause IRS penalties up to $340 per return? Get best practices for name formatting for 1099 filings here.
4) Always File Using the Latest IRS Requirements
IRS specifications change annually. Ensure your team and systems use the correct schema, layout, and business rules for the current tax year.
Review the latest IRS deadlines on our Deadlines page
5) Use Filing Software That Flags Errors in Real Time
Tools with built-in compliance checks can identify incomplete fields, invalid characters, incorrect form types, and formatting issues before files reach the IRS.
Did you know? – eFileMyForms has built-in real-time TIN matching
6) Validate All Income and Withholding Amounts
Put safeguards in place for numerical fields. Common issues to catch include:
- Negative values where they are not allowed
Decimal amounts in whole-dollar boxes
Withholding totals that do not align with reported earnings
Amounts entered without required companion fields
Tip: Use an eFiling software like EFMF that will catch discrepancies like this upfront.
7) Reconcile Totals Before Generating the IRS File
Confirm that detailed transaction records roll up correctly into summary totals.
Totals that do not match are a frequent cause of full-file rejections.
8) Double-Check Payer Details Before Submission
Confirm the payer’s legal name, TIN, TCC, address, and entity classification.
Even minor errors, such as an incorrect TIN digit, can cause the IRS to reject the entire transmission.
9) Control the Workflow for Original, Replacement, and Correction Files
Create a documented process for sending original files, resubmissions, and corrections.
This helps prevent duplicates, broken correction chains, and versioning issues.
Tip: You can also use eFileMyForms to manage this process!
10) Perform a Final Compliance Review on the Entire File
Before sending your file to the IRS via FIRE or IRIS, run a final verification to ensure:
- No duplicate entries exist
Required fields are populated for every record
Totals align with detail data
File formatting meets IRS/SSA rules
A last pass often catches inconsistencies that slip through earlier reviews.