Lost Your 1099 Form?Here's What You Need To Do!
When you receive payments for goods and services that you provide, you should receive a 1099 form on or before January 31 of the next year (assuming you made at least $600 for each client).
If you have numerous clients, you may receive tons of 1099 forms and it may be hard to keep track of them all.
Worst, you may even lose one or two of them, it happens!
If you did lose some of your 1099 forms, don’t panic!
You can still remedy the situation.
If you’re already hard-pressed for time to file your tax return, you can still file without having to worry about being late.
You just have to make sure that you report all of your taxable income on your tax return.
You wouldn’t want to under-report your taxable income because if the IRS catches you, you will have to pay some pretty serious penalties.
In this article, we’ll learn what happens if you lose a 1099 form, what you should do, and what you can do to help with the filing of your tax return (with or without 1099 forms).
I lost my copy of a 1099 form. What should I do?
If you have a proper recording of all the income payments you received, then you might not have to worry about lost 1099 forms.
Besides, not all income payments you received will be reported in a 1099 form, particularly those that were from clients that haven’t reached $600 for the year.
You still have to report those income payments on your tax return though, with or without 1099 forms, so it pays to have a proper recording of the income payments you receive.
Maintaining a record of all the invoices you issue is one example of a proper recording.
If you lost a 1099 form that you received from a certain client, you can check the record of your invoices.
Add up all the invoices that you issued to your client, and include the total to the taxable income that you’ll report on your tax return.
Another way is to review all of your business bank accounts.
It can get a little complicated though, particularly if payments from multiple customers are included in one deposit.
Some banks and financial institutions can also provide an annual summary of activity, which makes reviewing much easier.
Just make sure that you include in your tax return all income payments you received, even the ones that were not deposited into your account.
If you’re still not 100% sure of the income payments you received from a particular client, you might need to consult with the 1099 form you received from them.
If you lost your copy, you can either get a replacement copy from your client or request a Wage and Income Transcript from the IRS (which contains information about the 1099 form previously received by the IRS).
Request a replacement 1099 from your client
Contact your client and request a copy of the lost 1099 form.
This can be done in a lot of ways, such as calling them or sending them a formal letter.
Payers (the client in this case) are required to keep copies of the 1099 forms they filed with the IRS.
So chances are, they have a copy of the lost 1099 form.
Be patient though, especially if your client is a large business.
They’re probably dealing with a large volume of transactions, which might mean that you’ll have to wait for them to respond to your request.
Make sure that you properly communicate with your client that what you’re requesting is a copy of the 1099 form that they already sent to you.
This is important as getting issued a new one will be troublesome for you.
Payers/issuers of 1099 forms are obliged to file a copy of all the 1099 forms they issue to the IRS.
All the 1099 forms that you’re supposed to receive are linked to your Social Security number or EIN.
If you receive a new 1099 form, the IRS might think that you received additional income payments from your client, which it will treat as part of your taxable income.
Meaning, you’ll be taxed double for the same transaction!
In summary: contact your client, request a copy of the 1099 form they already sent you, and make sure that you properly communicate that what you need is a replacement copy and not a new 1099 form.
Request a Wage and Income Transcript from the IRS
A Wage and Income Transcript is a document that contains information about a taxpayer’s income as reported to the IRS.
This includes data from information returns received by the IRS such as Forms W-2, 1099, 1098, and 5498 (IRA contribution information).
It is available for up to 10 prior years if requested online or with Form 4506-T.
This means that a transcript can include historical information of up to 10 previous years.
Getting an IRS Transcript (such as the Wage and Income Transcript) can be done online or by mail.
You can order one online or by mail by clicking here.
You can also request a Wage and Income Transcript by mailing/faxing a form 4506-T.
Instructions for filing up the form can be found on page 2.
Source: Form 4506-T
Do note however that the previous year’s transcript may only become available after the April income tax filing deadline.
That means that the wage and income transcript for 2021 may only become available in May 2022.
Requesting a transcript online can give you immediate access to your requested transcript, which is handy if you need the information immediately.
You’ll have to register online with the IRS though, so if that’s not your cup of tea or maybe it is but your online registration can’t get through, you can still request a wage and income transcript by mail.
It will take 5 to 10 calendar days to get your requested transcript if you do it by mail.
Are there any penalties if I lose a 1099 form?
There are no direct penalties for losing a 1099 form.
There are penalties though if you fail to file your return on or before its deadline because you’re still looking for your missing 1099 form.
If you failed to file on time, there is a “failure to file” penalty of 5% of the tax due for each month (or part of a month) your return is not filed, and that is on top of interest.
It is advisable to file your tax return on time with as much accurate information as you can gather.
Even it’s not 100% accurate, you don’t have to worry if you have reported taxable income that exceeds the 1099 forms that can be traced to you.
The IRS won’t penalize you for that.
Besides, if you need to make any changes after you already filed your tax return, you just have to file an amended return (e.g. form 1040-X for individuals).
If you managed to find or get a replacement copy of your missing 1099 form and already filed your tax return, review the information you reported to check if there are any discrepancies.
If you find out that you reported less, it is suggested that you file an amended return as soon as possible so that you can avoid paying penalties.
When is it required to attach a copy of the 1099 form you received?
As already mentioned, you can file your tax return even if you are missing some 1099 forms.
This means that you’re usually not required to attach copies of your 1099 forms on your tax returns.
However, if a 1099 form shows that federal or state taxes were withheld, you need to attach a copy of the 1099 form to your tax return.
This is because it is stated in the Instructions for Schedule C (Form 1040) that you need to attach supplemental forms if federal taxes were withheld.
Also, if you are submitting an amended tax return, you’ll have to attach any 1099 forms that were not reported in your original tax return.
In summary, you don’t have to attach 1090 forms to your tax return unless: (1) they show that federal or state taxes were withheld, or (2) they’re needed to support your amended tax return.
Why is it important to document my 1099 forms?
While it isn’t always required to attach your 1099 forms to your tax returns, it is still recommended to keep your copies of them.
As it includes information about the income payments you received (and sometimes withheld taxes), it’s a great way of documenting your business’s transaction history.
And if you happened to be picked for an IRS audit, your 1099 will probably be needed.
So it pays to document your 1099 forms.
How can I prevent losing my 1099 forms?
It can get frustrating if you lose your 1099 forms, especially if you don’t have proper documentation of the income payments you received.
That is why it’s helpful to know of ways to prevent it.
One way is to keep a file folder for each type of your tax documents (including your 1099 forms).
You can keep a folder for each type of 1099 form, or you can segregate them by the month and/or year you received them.
You could also take advantage of technology by creating digital copies of your 1099 forms.
This can be done by scanning all the 1099 forms you receive, ideally the same day you received them, and then keep the digital copy on your computer.
Make sure that you can easily and reliably access them. It is not recommended that you store them on the cloud though.
Your 1099 forms contain sensitive personal tax information, so it’s important to make sure that only you or authorized persons have access to them.
Proper documentation is key
Complimenting your documentation of tax documents with proper recording/documentation of your business transactions is recommended too.
Properly document all of the invoices/receipts that you issue, all of the invoices/receipts or any document that can substantiate your expenses, also the copies of the 1099 forms that you yourself issue.
Doing so will make the preparation of your tax return much easier.
With proper documentation and good record-keeping, you won’t have to worry about missing 1099 forms (unless they contain information about income payments that you usually don’t record).
If you’re confident with the information that you can get from your documentation and record-keeping, you won’t have to worry if you under-reported your taxable income.
That means that you won’t have to worry about paying penalties too.