Hello,

First time poster with a strange scenario. I am a solo practitioner attorney that does contract work. One of my recent clients, which promises to be a lucrative one, did not have a 1099 prepared when I asked for one, but gave me his taxpayer ID and told me to fill out what I needed. I did so and then submitted my taxes.

However, due to an accounting error the amount that I disclosed on my 1099 is actually almost $3500 higher than what I was actually paid/what I just learned my client listed on the 1099 he filed. This is a tenuous client that promises to become my largest one if I can hold it, and I would happily pay the extra taxes rather than disclose to him that I overstated my income because of my own poor bookkeeping (a tax attorney I am not)

With that as background:

(1) Do you think either me or my client risk any penalties or additional interactions with the IRS from this 1099 reporting discrepancy if the result is that I end up paying MORE in taxes than I should have, and

(2) Do you think that the IRS is likely to contact myself or my client for follow-up information

In essence I want to know if I have to fix anything on my return or 1099(not trying to commit fraud), and if so, is there a way to do so without involving my client and making him wise to my poor bookkeeping. Thank you for any insight.

I can try to answer this one. Most people would not ask for a 1099, so I am not sure why you did that. If the client didn't file a 1099, that usually isn't your problem. You also shouldn't be filing a 1099 with the IRS for yourself, if that is what you did. Instead, you report the income on your return and leave it at that. But you probably already knew that....

To get to your questions, the IRS's computer matching system will probably not be able to tell that the 1099 is off. So you probably wont' hear anything more about it.

If you overreported your taxes, you might just submit a refund claim to recoup the overpayment. If you do not care about the taxes, then you shouldn't have to do anything. Penalties and other problems come from underreporting--not overreporting.