“We sent a 1099 to a subcontractor for $14k and deferred doing our taxes. Upon completing our taxes, noticed that we should have done the 1099 for $19k. What can be done about this, since I am sure the subcontractor has already filed his taxes?”---->This is not an unusual situation; small businesses are notoriously sloppy about paperwork.You need to send the subcontractor a corrected 1099MISC Form(Enter an "X" in the "CORRECTED" box at the top of the forms.) . You also need to complete a new 1096 form to transmit the corrected 1099 and write in bottom margin of the 1096 to the IRS. You need to send a corrected Form 1096 with every 1099 submittal package. The 1096 is just a transmittal document. Usually if you have made a good faith effort to file 1099's correctly the IRS will not assess a penalty.The subcontractor( I assume that he has already filed his return) needs to file his amended return so that he can claim the deduction under the other Expenses category on his SCh C line 27and ask you for a corrected form or explanation for the discrepancy on the 1099MISC Form. Probably, you need to send your subcontractor a corrected 1099MISC Form. He should report the whole $19K on Sch C line 1 then needs to report additional income and he also needs to attach a statement to his amended return explaining that you have erroneously reported the additional income to him. |