Don’t Panic! A Guide to 1099 Errors for AP Teams

In this episode, compliance expert Jason Dinesen joins host Grace Berube to walk through what AP teams should do when they discover an error on a filed 1099 or realize they missed filing one altogether. Jason explains how the IRS’s matching process actually works, which errors matter and which ones don’t, and how the penalty structure gives teams more breathing room than they might expect. He also covers what happens when a form should have been filed but wasn’t and closes with a brief history lesson on the 1099’s void box.

WHAT YOU’LL LEARN IN THIS EPISODE

• Why the IRS files 1099s the way it does — and how understanding the computer matching process clarifies which errors actually need to be corrected.
• Which errors don’t require a correction at all — including wrong first names, outdated addresses, and small dollar discrepancies that fall under the de minimis threshold.
• Which errors do need to be fixed — including wrong last names, incorrect taxpayer ID numbers, significant dollar amount errors, and forms filed in the wrong box or on the wrong form type.
• How the August 1st correction deadline works, what it means for penalty exposure, and what to do if you discover a form that should have been filed but wasn’t.
• What the void box on a 1099 actually is, where it comes from, and why it’s largely a relic of the paper-filing era.

Jason Dinesen
President, Dinesen Media Ventures

Jason Dinesen, EA, is a distinguished tax professional and educator with a fervent passion for demystifying complex tax concepts. Jason prepared tax returns and provided accounting services as a practicing accountant from 2009 through the summer of 2025.

He’s also the founder of Dinesen Media Ventures, which provides a diverse range of media content, ranging from continuing education programs for accountants and tax professionals, to podcast production to radio and journalism content.

Recognized for his sharp tax interpretations, Jason is renowned for promptly analyzing the latest tax updates and IRS guidance, sharing his insights with the professional community. Over his career, he has educated more than 200,000 accounting, tax, and HR professionals on various topics. Form 1099 was the very first thing he ever taught on, on April 26th, 2012, at a Sheraton Hotel next to a Lowe’s in West Des Moines, Iowa. He is IOFM’s go-to person for anything related to 1099s and information reporting.

Grace Berube
Senior Content Manager, IOFM

Grace is the Senior Content Manager at the Institute of Finance & Management (IOFM), where she has led content strategy and development since 2022. In this role, she oversees all aspects of IOFM’s digital and event-based content, ensuring it remains timely, relevant, and actionable for all financial operations professionals.

Grace manages IOFM’s robust library of site content, leads the organization’s editorial and member webinar programming, and hosts IOFM’s podcast series. She also oversees a team of subject matter experts who contribute thought leadership and educational articles. In additional, Grace curates and manages all speaker content for IOFM’s in-person and virtual events, ensuring consistency and quality across every touchpoint. With nearly three years in the role, Grace brings a deep understanding of the financial operations landscape and a passion for delivering content that empowers professionals to excel in their roles.

Transcription

Grace Berube: Welcome to the IOFM podcast. This is a podcast for accounts payable and accounts receivable professionals who want to stay in the know with current AP and AR trends and ideas. We’ll be interviewing professionals in this space on a wide variety of subjects, including automation, artificial intelligence, career growth, compliance, leadership, and much more.

Hey, Jason. How's it going? 

Jason Dinesen: I'm good, Grace. How are you?

Grace Berube: I'm doing good. Welcome back to the IOFM podcast. What are we talking about today?

Jason Dinesen: Well, today I thought, people have probably come through filing their 1099s, at least for the most part, by now. And so what do you do if you find an error on something that you filed—either you find it, or your contractor, or whoever your vendor is, they find it, or you maybe discover that you should've filed something and you didn't?

00:01:06

So I thought that would be interesting to talk about because there's actually some deadlines to meet that are not looming yet. They're in the summer, but it's good to know about now so that you can get on top of these things. 

Grace Berube: Absolutely, yeah. This is all great information, obviously, like you said. Most of 1099 season is over as you're listening, but always happy to get ahead as much as you possibly can. Just to start us off, in a basic sense, why do we file 1099s?

Jason Dinesen: Yeah, and that's actually to key to understanding the correction process, and so the answer to that is tax compliance. We talk so much about 1099s at IOFM, or at least I do. I'm sure you guys kind of try to escape as much as you can. [laughter] We talk about it and everybody who attends the webinars and the conferences, 1099s are what we all talk about. Sometimes I think we lose sight of: Why are we doing it? And the answer—some people will say, "Well, the IRS tells us we have to." And that is sort of true, although it's not the IRS; it's tax law tells us we have to.

00:02:28

But if we dig a step deeper, why does tax law tell us we have to file 1099s? To answer that, we have to think about where your 1099s go. So, when we talk about filing 1099s, you send 'em to the IRS and they put the information off of your 1099, they put it in their computer systems. What they're really doing is that amount that you put on the 1099 is taxable income to the recipient. So the IRS' computers are logging all of these 1099s, plus the other forms that those people are getting—W-2s for example. It all goes in the IRS' computers, and then the IRS is waiting for the recipients of those forms to file their tax returns, and then their computer are looking at the tax return to make sure that they've accurately reported all of their income based upon the forms that the IRS received. 

00:03:42

And the way that the IRS computers do this matching or logging of the forms is they take the first four characters of the person's last name (if it's an individual) plus their taxpayer ID number (usually their Social Security Number). If it's a business, they take the first four significant characters, which means usually they ignore things like "the" and they'll start with whatever the first significant word is. But it's four characters plus the EIN. 

I'll stop there for just a second, because that answers this first question, which is something that you need to know in order to understand then the process of finding errors, and some errors need to be fixed and some errors need to be fixed. 

00:04:45

Grace Berube: Got it. That makes sense. So let's start with the ones that don't need to be fixed.

Jason Dinesen: So, since the IRS computers don't use the first name, nor do they use addresses, did you know, if someone's first name is wrong on a form, you are not required to fix it and there's no penalty. I'm getting ahead of myself here by talking a little about penalties, but there's no penalty if the first name is wrong.

00:05:17

Now, obviously, if you find out the first name was wrong, you should fix it in your system so it doesn't happen again, but the IRS doesn't care. They also don't care about addresses. They used to, but somewhere along the line, about six or seven years ago, they stopped caring about addresses, so addresses are another thing where don't need to correct. And then there's what's called de minimis errors. De minimis means like small, so small dollar amount errors: $100 for most things or $25 if you're reporting withholding.

00:06:02

So that means you could make a dollar amount error on a form, but say the actual amount should've been $1,000 and you put $1001. That's a one dollar error, which is much less than $100, so you're not required to fix it. So think of it as like too small to worry about. 

Grace Berube: Got it. That makes sense. That's good to know. I feel like some people would be even concerned about any sort of error like that, so that's great. So, I mean, I'm sure that there are plenty that also do need to be fixed, so what are those ones that we'd be looking at? 

00:06:37

Jason Dinesen: Yes. So the things that do need to be fixed are the things that would prevent the IRS computers from doing their job. If we go back to that first item of why do we do all of this, think about errors that make it more difficult for those computers to do their job. So wrong last names or wrong business names, those do need to be fixed. Wrong taxpayer identification numbers always need to be fixed because those are things that make it more difficult for the computers to do their job.

00:07:25

Dollar amount errors that are not de minimis. So if you're off by, say, $1,000, you'll need to fix that. Or if you used the wrong form or you put something in the wrong box on the form, then you would need to fix that. And that leads us into a discussion of penalties. And if it's okay with you, Grace, I'll just go right on ahead and talk about penalties. 

Grace Berube: Go for it. That can be very important.

00:07:58

Jason Dinesen: Yes. Well, and the reason why—it's all related. So when we say errors need to be fixed, those are also the errors that the IRS could penalize you for. So we're probably all familiar with the due dates. Your 1099-NEC has to be filed with the IRS by January 31^st. 1099-MISC has a longer period of time, March 31^st for the miscellaneous. But either way, whatever deadline you're looking at, the law says you must file a complete and accurate form by the deadline. So that means if you filed something for your independent contractor by January 31^st, so you met the deadline, but you have one of those significant errors on it—a last name error, a Social Security Number error, a dollar amount error that's not de minimis—you didn't file an accurate form by the deadline, meaning the IRS could penalize you.

00:09:19

But don't panic if you discover something now. Well, okay, you might be listening to this in September or October or something—later in the year, and I guess that's a different discussion, but if you're listening to this more around the time that this is airing, earlier in 2026, you don't need to freak out if you discover an error, even if it's one of those errors you could be penalized for, because there's an out. If you file a correction by August 1^st—this is a weird deadline. It's not July 31^st. It's August 1^st—there is no penalty as long as the number of forms you're correcting is ten or less.

00:10:11

Now, here, I have to get into kind of the nerdy 1099 guy stuff. If you're a power user, like a power filer of 1099s, there's actually a formula where you take a certain percentage of the forms that you filed. The bottom line is: All businesses get this ten amount, and if you file thousands of 1099s, you could get more than ten that you can fix without being penalized, as long as you get the correction in by August 1^st.

Grace Berube: Got it, okay. And yeah, that's a very different—not very different, but a different date than what we're used to with those 31^st deadlines, like you just said. And what if you discover that you should've sent a form to someone during filing season, now, kind of whenever you're listening?

00:11:09

Jason Dinesen: Yeah, so that comes up a lot, where you go through your records or you're getting your tax return filed a little bit later in the year and you discover that there was a contractor or someone that you should've sent a form to. And people ask, "What do you do?" The answer is: Just file it. I will tell you, in my own experience, when I was practicing, I had clients at times file 1099s literally a year late, like 12 months late, and not get penalized. Now, sometimes I'll say that during sessions and people will chime in, saying, "Oh, I've been penalized for late filing." So don't be like, "Oh, they're not going to penalize me," but they might not.

00:12:01

Don't count on the IRS not penalizing you, but it could happen where they wouldn't penalize you. The other thing is, when we get into penalties and stuff, if you file before August 1^st, there's a lower penalty if they do penalize you. And then the penalty goes up starting after August 1^st.

And the other thing is, if you know you should've filed something and you didn't, there is what's called an intentional disregard penalty which I think now is $660 per form. If you find something that should've been filed, just do it. 

Grace Berube: Right. That's the best advice. What else? Is there anything else we could be doing right now, as we're listening? Anything else we need to know in this sort of off-season to kind of get ahead of the game?

00:12:58

Jason Dinesen: Yeah, there's just one other thing. Someone asked me this. It wasn't in "Ask the Experts," but it was someone that just reached out to me and asked about this. And that is: What is the void box on the 1099? And you know, Grace, that I love to pull out the little trivia oddities of things. I'm sure a lot of people are like, "Wow, that's weird." [laughter]

The void box—if you look at the 1099, there is a box that says "void." That is not applicable to electronic filing, which most of our listeners are probably doing, e-filing. But if you're filing on paper, it could because back in the olden days of typewriters—I don't know. Did you ever use a typewriter, Grace? 

Grace Berube: So I actually did. My dad had one and he gave it to me. I mostly liked to play around with it. There's been a few typewriters in my life, just not my own.

00:14:10

Jason Dinesen: Okay. Well, some people might be like, "Well, what's a typewriter?" I'm guessing a lot of the IOFM audience know. I think a lot of our listeners have used a typewriter, though, probably. The way it used to work is, you would feed through these pages of 1099s with three or four forms on one page, and you'd be typing along and maybe you made a typo. If you typed something wrong, you could turn the knobs back up and X out the void box so that then you could continue on down the page with the other form spots that were on that page and then mail it all off to the IRS. And then the IRS would know that they should disregard that form that had the void box checked.

00:15:08

So that's kind of a holdover from the olden days when people were filing on paper and they were typing things on typewriters and so forth. Some people actually still do that, though. I've talked to people at the IOFM conferences who will e-file with the IRS and then they'll type on a typewriter the forms that go to the recipient. But we're getting sidetracked. That's a different discussion for a different day. 

Grace Berube: We'll chalk that one up. We'll think about that one for the next couple episodes. [laughter]

00:15:44

Jason Dinesen: But those are the main things, Grace. Just know that it's okay if you made a mistake on a 1099. It's not the end of the world. You just fix it. And best of all, if you fix it by August 1^st you're probably not going to be penalized.

00:16:02

Grace Berube: Yeah, I feel like a lot of people would get nervous and really not know what to do, think they're going to be in a lot of trouble. But the fact that you have quite a few months in between to figure out those errors and to send in that correction is a little bit of relief, so that's great to know.

Jason Dinesen: Absolutely.

Grace Berube: Well, thank you so much, Jason. As always, we appreciate it and we look forward to having you back on the podcast soon.

Thank you so much for listening to the IOFM podcast. Remember to head on over to the Member Forum to discuss today's episode and provide ideas for our next one. And to stay up-to-date on IOFM's current events, both in-person and virtually, head on over to IOFM.com. 

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Receive 1 CEU per hour of listening time towards IOFM programs:

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Continuing Education Credits available:

Receive 1 CEU per hour of listening time towards IOFM programs:

Receive 1 CEU per hour of listening time towards maintaining any AP and P2P related program through IOFM! These programs are designed to establish standards for the profession and recognize accounts payable and procure-to-pay professionals who, by possessing related work experience and passing a comprehensive exam, have met stringent requirements for mastering the financial operations body of knowledge.