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Handling 1099-NEC Reporting for Returned Overpayments
July 23, 2025
Q. A vendor was overpaid for services in 2024 and that amount was issued on the 1099. The overpayment amount was returned June 2025. Should I submit a correct 1099-NEC for 2024.
A.
(Answered by IOFM's third-party tax expert)
You do not need to correct or change 2024 (no reporting is required on your part for this transaction). See pages 86 and 87 of the Master Guide to Form 1099 Compliance, under the heading "Refunding Overpayments and the Claim of Right Doctrine." See this prior discussion in…
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