What if the information is wrong on the 1099-K?
As a freelancer or an independent contractor, you are required to file a 1099-K form with the IRS if you have earned more than $20,000 in gross payments and have completed at least 200 transactions in a year through a third-party payment processor, such as PayPal or Stripe. The 1099-K form reports the total amount of payments processed through the third-party payment processor.
But what if the information on your 1099-K is wrong? In this blog post, we will discuss the steps you can take if you receive a 1099-K with incorrect information.
Step 1: Contact the payer
The first step is to contact the third-party payment processor or the company that issued the 1099-K. Explain the situation and provide any supporting documents, such as receipts or invoices, to back up your claim. It’s possible that the incorrect information is simply a mistake or a typo.
Step 2: Request a corrected 1099-K
If the payer acknowledges the mistake and agrees to correct the 1099-K, they will issue a corrected form to you and the IRS. The corrected form will replace the original form, and you will need to use it when filing your taxes.
Step 3: File a dispute with the IRS
If the payer refuses to correct the 1099-K or does not respond to your request, you can file a dispute with the IRS. You will need to provide evidence to support your claim, such as receipts or bank statements, to show that the reported amount is incorrect.
You can file a dispute by sending a letter to the IRS, explaining the situation and providing your evidence. The IRS will investigate the dispute and may contact the payer for further information.
Step 4: Consider consulting a tax professional
If you are unsure of how to handle the situation or if the dispute becomes complicated, you may want to consider consulting a tax professional. They can provide guidance on the best course of action and help you navigate the process.
In conclusion, if you receive a 1099-K with incorrect information, don’t panic. The first step is to contact the payer and request a correction. If that doesn’t work, you can file a dispute with the IRS and provide evidence to support your claim. Consider consulting a tax professional if you need further guidance.