1099

[kristinhow]

Hi there,

1. Is there a penalty for sending the 1099MISC information return late to the IRS?

2. I was notified by CALPERS that we owe tax for a payment that was made and then pulled back the next day. Because it crossed calendar years, CALPERS says they cannot get the money back and we have to file for it. They sent the 1099R March 1. Isn't this too late?

I cannot tie their 1099R to net payments plus tax withheld and there is concern that the 1099R includes that payment pulled back. How can I tie it out and if it needs to be revised, how could I get it revised without delaying filing my parents' return?

[JamesG1]

There is a penalty for filing a 1099 form late.  TurboTax states:

If a business fails to issue a form by the 1099-NEC or 1099-MISC deadline, the penalty varies from $50 to $270 per form, depending on how long past the deadline the business issues the form. There is a $556,500 maximum in fines per year. If a business intentionally disregards the requirement to provide a correct payee statement, it's subject to a minimum penalty of $550 per form or 10% of the income reported on the form, with no maximum.

March 1 is well past the January 31 deadline but if the 1099-R income is reported to the IRS, the IRS is likely to expect the income to be reported on your 2021 Federal 1040 tax return.

You are correct that you tie the 1099-R back to the payments received less withholding reported.

If the issuer provides a corrected 1099-R, you can either:

• Wait and file with the corrected 1099-R, or
• File now and amend later with the corrected 1099-R.

If you feel strongly about the income being misreported and the issuer will not correct the 1099-R, you can report the original 1099-R and under other income line 8 of the 1040 and line 8z of the Schedule 1 report a negative value that corrects the income.  You would use your research to justify the correction should the IRS question your actions.

If the over-reported amount was $100, the entry would look like this.

1040 line 5b      $1,300

1040 line 8            -100

Net                     $1,200

In TurboTax online, follow the steps below to report the reversal of income.

• Select Federal from the left side menu.
• Click on Wages & Income.
• Scroll down to Less Common Income.  Click Show more.
• Click Start / Revisit to the right of Miscellaneous income….
• Click Start / Revisit to the right of Other reportable income.
• At the screen Other Taxable Income enter the description of the income and the negative value.

View the entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets.

The income will be listed on line 8z of the Schedule 1 Additional Income and Adjustments to Income and line 8 of the Federal 1040 tax return.