My employer reported my base salary on a W2 and my percent of billed work compensation on a 1099. I confronted my boss about this and he submitted an amended W2 reporting my variable compensation and base salary together, but he failed to retract my 1099. The IRS is now seeking payment for income I didn't earn. I asked repeatedly for him to fix this and he failed to do so. I no longer work for him. What form do I need to file to explain to the IRS that I don't owe taxes for the errant 1099?
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If the IRS will not accept the fact the 1099 was incorrect then you can fill in a Sch C showing the 1099 income and a corresponding expense to zero it out. Use the Misc category section on page 2 and make an entry of "income reported on the corrected W-2".
If the IRS is already billing you for additional tax, you need to respond to the IRS notices, not just file a form. Follow the instructions in the most recent IRS notice for how to respond if you disagree with it. If you have already received several notices, you may need help from a local tax professional to straighten out the problem.
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