If that is the case, and you have an "incorrect" Form 1099-MISC, the IRS directs that you do the following:
"If this form is incorrect or has been issued in error, contact the payer. If you cannot get this form corrected, attach an explanation to your tax return and report your income correctly."
As the second approach requires the attaching of a statement (and a photocopy if you so choose), you would need to paper-file your tax return, by mail, in the traditional manner. This action would preclude e-filing your tax return. But, that aside, an incorrect 1099-MISC will not prevent you from filing your tax return.
You may also be interested to read the response to a similar question asked by another taxpayer last season, in that they had an incorrect Form 1099-MISC as well. The answer given there describes substantially the same process as this year. Here is that link:
https://ttlc.intuit.com/questions/2855112
Thank you for asking this important question.
Dear Turbo Tax, today is Sept 5, 2020. I just learned that my 2017, 2018, and 2019 1099s are using the wrong Tax Payer ID. The dollar amount is correct, and I reported all income on my 1040s. The mistake is that the filers used my EIN from my single-member LLC that is an IRS disregarded entity. It was missed for 3 years in a row, because I thought it was correct. My 2017 and 2018 tax refunds were quickly provided by the IRS. But for this year, 2019 filing, I still have not received my refund. A company from 2017 is no longer in business, so it can not be fixed. The other companies said that they will fix the filing, but it is very low on their list of work. What do I do? Is is too late to fix it? How do I fix it? Again, the 1040s are correct, the dollar amount on the 1099s are correct, it is just the TIN, name, and address.
If this income is being reported on a Sch C then the 1099 can have the EIN or SS# on it ... they are interchangeable. There is nothing to report or correct.
And 2019 returns are just taking longer to process this year so patience will be needed.
You are jumping to the same assumption as those who filed the 1099s. They assumed that my llc was a corporation. My llc is a disregarded entity. I do not file on a schedule c. A llc that is a disregarded entity must be filed under my ssn, And treated as a sole proprietor. I just learned this. My 1099s are for rental income on a schedule e, and A 1099-b and 1099-div for stocks, also on my personal 1040. All of this was properly listed on my 1040, but improperly listed on the 1099 filing by the filer. Starting in 2017. What do i do?
Schedule C is for disregarded entity and sole proprietor independent contractor self employment or Single Member LLC etc. It is under your ssn and part of your 1040 personal return. (If you were a corporation you would be filing a 1120 or 1065 business return.)
But if you filed it on Schedule E as rental income instead of schedule C I don't know if that was right. It could be ok and you just need to tell the IRS it's on E.
Ok ... when you applied for the EIN that you got for the LLC is linked to your SS# and if this is for a Sch E then just like the Sch C there is nothing you need to fix. Although it is preferable for the payer to use the EIN instead of the SS# they are interchangable.
Look at the SS-4 form ... when you got the EIN your SS# was required ... this is how they are linked ...
Two more points ...
1) the reason for getting an EIN is so that your SS# is not being used ... this is a safety feature. If you filled out a W-9 for the payer you should have checked the "Individual/sole proprietor or single-member LLC" box ... note they are treated the same way.
2) if you were a corporation then a 1099 would not be required ... so the LLC must be issued a 1099
I thought the same thing, that the IRS would link my SSN to the EIN because of the way that I created the EIN. But that is not the case. For example, when I go to my IRS tax transcripts using my SSN account, none of the income from the 1099s that were marked with the LLC's EINs are listed. Also, there is no way to create an IRS account for an EIN. When I read the IRS's filing instructions on the W9, it says that I must use and report all income to my SSN (and not the EIN). That is the problem, my "disregarded EIN" was used for the 1099s. The IRS 1099 instructsions for filers state that if the EIN is used, and not the SSN, then a 1096 Type 2 correction is needed. When I set up my accounts with The Vanguard Group, they FORCED ME to use my EIN for my single member LLC... they KNEW it was a disregarded entity, it even says it on there entry screen. They are now planning to fix 3 years of incorrect 1099s --- I am not a tax professional, so I am looking for a turbo tax expert to tell me what else I should do. So far, everyone on this site is saying that I do not need to do anything, but that contradicts the 1096 type 2 error instructions. Please, why are you saying that the IRS is wrong?
You are really worrying about nothing ... you and Vanguard did everything correctly and there is NOTHING to fix. You DID put the income on the Sch E on your personal return filed in your SS# as required by law. Stop trying to fix something that is not broken. NO ONE is wrong not even the IRS.
If you really want the income transcript for the EIN then fill in a 4506-T and request one although it is a waste of time IMHO ... https://www.irs.gov/forms-pubs/about-form-4506
The whole reason for getting an EIN for a disregarded entity is so you don't have to give your SS# to payers like Vanguard. If you wanted to give your SS# why did you even form an LLC and get the EIN in the first place ? An LLC really gives you no real protection from lawsuits but I suspect someone talked you into doing it which I see a lot. The only real protection is a good insurance policy.
Thanks Critter - I truly appreciate your comments. This is what I understand at this point.
1) The IRS W9 states, on page 3, that a disregarded entity must use the TIN of the personal taxpayer, a SSN. Vanguard forced me to use the EIN of the disregarded entity, while also checking the box as an individual. Its been 3 years, and I just learned that this might be wrong.
2) The IRS's instructions for filling out a 1099 for a disregarded entity / LLC states that I am to use my SSN, and not my EIN. If the EIN is used, then a 1096 Type 2 error needs to be reported on the corrected form. I will ask Vanguard to validate this point. Criiter-3 is saying that I can use the EIN or the SSN, so Vanguard did it right. My property manager used my EIN as well, and I filed my rent income on schedule E (I did not use schedule C). Critter-3 is saying that both schedule C and schedule E are correct.
3) The EIN for a disregarded entity was needed by Wells Fargo and Vanguard to set up my accounts, but wells fargo still reports my 1099-INT to my SSN. Vanguard reports the 1099-DIV and 1099-B to my EIN. It was vanguard who told my property manager to use my EIN for the 1099-MISC rental income.
4) I am getting mixed advice on whether or not I need to perform a corrected 1099 with my SSN (remove my EIN). Critter-3 is saying that I do not need to submit any corrections and this is why I received my 2017and 2018 tax refunds even though I used my EIN on the 1099s. Another person has told me that I need to fix the 1099s from the last 3 years, even though I received refunds. This is the reason for the confusion.
5) Critter-3 is asking me why I opened the LLC. Here are my reasons:
5A) An LLC allows me to deed real-estate in the name of the LLC. It hides my personal identity. I own many rental homes, and I do not want a google search to reveal my wealth.
5B) An LLC makes the business seem more professional and established. My tenants want the comfort of knowing that they are renting a home that will be available to them for many years. It makes them feel safe.
5C) A single-member LLC provides protection against civil law suits, but not criminal charges. The civil suit will be capped to the assets that are held within the LLC. I own many LLCs for this purpose. I still need commercial insurance policies.
Here is where I am. I mailed my return in March, and WMR says "still processing" with no letters being sent to me, and no error codes on my transcripts. In wondering why I have not received anything, I stumbled on the possibility that the 1099s are wrong for 2017, 2018, and 2019. I will be meeting with a Vanguard Group's tax speciaist, as they were the source of this possible problem. I will raise all of the points that are in this stream. Meanwhile, the IRS has published that no one should call them, and no one should write to them. In 4 months, I will be filing my 2020 returns, and I wonder if the 2019 returns will still be processing.
Hey guys ... can anyone else confirm that this person has NOTHING to fix since he is not believing me and misunderstanding the IRS instructions.
@Anonymous
@Honorcode @CRitter3 along with all the others in this thread trying to help, please read my post in it's entirety. It looks to me like there are some "surprises" that I've managed to dig up.
it is just the TIN, name, and address.
There is a difference between a TIN and an EIN. So your terminology matters.
TIN - Taxpayer Identification Number. This is a 9-digit number issued to a taxpayer that does not qualify for a social security number, but they are authorized to work legally in the U.S.
EIN - Employer Identification Number. This is a 9-digit number issued to a non-living, non-breathing entity for tax filing purposes. The EIN *must* be tied to the TIN or SSN of a living, breathing human.
If the TIN/EIN does not belong to you, then the issuer needs to issue a corrected 1099-MISC. Otherwise, if it does belong to you, there's nothing to correct.
They assumed that my llc was a corporation. My llc is a disregarded entity.
Now they didn't, *you* assumed what the issuer assumed. A 1099-MISC is not required to be issued to a corporation regardless of the amount. The issuer correctly "assumed" your business is a disregarded entity. Therefore if the amount paid was more than $600 they were "required" to issue the 1099-MISC. If the amount paid was less than $600, then they have the option to issue a 1099-MISC, and elected to exercise that option to issue it. Doesn't matter if they used your EIN or your SSN. The issued 1099-MISC is correct. Period.
A llc that is a disregarded entity must be filed under my ssn
Again, that is not correct. A disregarded entity reported on SCH C can use the SSN *OR* the EIN. It doesn't matter. The only time a disregarded entity is required to have and use an EIN, is if that disregarded entity has W-2 employees, and that's it. Period.
Remember, The IRS is the only source that issues EINs, and all EINs *must* be tied to an SSN. The IRS knows what SSN your EIN is tied to. Therefore, it *does* *not* *matter* what is on the 1099-MISC, and for that 1099-MISC it "does" *not* *matter* if you have W-2 employees or not. The IRS still knows what SSN is tied to an EIN, and they know what EIN is to a specific SSN. So long as the number, be it your SSN or EIN, is correct, there is no problem here.
The IRS W9 states, on page 3, that a disregarded entity must use the TIN of the personal taxpayer, a SSN.
See above for the definition of TIN and EIN. They are two physically separate types of tax identification numbers.
Vanguard forced me to use the EIN of the disregarded entity, while also checking the box as an individual.
Which is absolutely correct. Remember, a "disregarded entity" is exactly that - disregarded. The IRS does not see income earned by the business as being earned by a separately taxable entity. They see it as being earned by "you" "personally". So as far as the IRS is concerned, income earned by the business is *IN FACT* earned by you personally.
The IRS's instructions for filling out a 1099 for a disregarded entity / LLC states that I am to use my SSN, and not my EIN.
I can find no such statement in the 1099-MISC instructions at https://www.irs.gov/pub/irs-pdf/i1099msc.pdf So if I'm just missing it, please provide me the page number, column number and paragraph number.
When initially reading your posts in this thread, A thought came to mind of "why on this green earth are you reporting rental income on SCH C???" Then you clarified that you're reporting it on SCH E. But to complicate matters more you threw Vanguard into this mix of bananas and ketchup with your statement, " It was vanguard who told my property manager to use my EIN for the 1099-MISC rental income. " So here's my question to you that will help provide quite a bit of clarity, depending on your answer.
- What on earth is Vanguard doing communicating with your rental property manager? I suspect this rental property is owned by an IRA or some other tax deferred retirement vehicle. Is this so? Please explain why Vanguard is involved in this rental property.
An EIN is merely one type of TIN, the latter being an all-encompassing term (i.e. Taxpayer Identification Number).
https://www.irs.gov/individuals/international-taxpayers/taxpayer-identification-numbers-tin
Thank you for your well thought reply. Let me offer the reasons why I am still confused, and to address your questions.
1) IRS W9 Instructions, Page 4, Part I: I copied it directly from the W9 in black italic font. The red font are my comments based on my understanding of the instructions. https://www.irs.gov/pub/irs-pdf/fw9.pdf
"If you are a single-member LLC that is disregarded as an entity separate from its owner, enter the owner’s SSN... The IRS makes it very clear that I am to use my SSN, and not to use my EIN. The next part adds a lot of confusion ... ( [by this previous text in the parenthese, the IRS means that if the disregarded LLC is owned by an LLC that is a corporation, and that corporation has an EIN, then use the corporations's EIN] Now, I suspect that a lot of people are now confused, so the IRS adds the the next sentence, and this sentence is repeating the first sentence of this paragraph.
It is the above instructions, that are terribly written, that cause a lot of problems. If I were to re-write it, I would say the following:
a) A single-member LLC that is also a disregarded entity can be owned by an individual, or owned by another LLC.
b) If the owner is an individual, then you must use the individuals SSN (even if the disregarded entity has an EIN, do not use it for IRS purposes)
c) If the owner is a Corporation, then use the corporations EIN.
d) If the owner is a different single-member LLC, and that LLC is also disregarded, then use the individual's SSN
======== The above covers the W9 ==================
Part 2: IRS Instructions on filling out a 1099. Please see
https://www.irs.gov/pub/irs-prior/i1099gi--2019.pdf. Section J. It states:
"For a single-member LLC (including a foreign LLC with a U.S. owner) that is disregarded as an entity separate from its owner under Regulations section 301.7701-3, enter the owner's name only on the first name line and the LLC's name on the second name line. For the TIN, enter the owner's SSN (or EIN, if applicable). If the LLC is taxed as a corporation, partnership, etc., enter the entity's EIN."
The EIN is only applicable if the owner is a corporation that has an EIN. In my case, I am a disregarded-enetity, so the IRS wants the 1099 in with my SSN, not the EIN.
============ The addresses the 2 key IRS instructional documents for disregarded entities ====
More helpful information:
1) Rental Income = I only use Schedule E. I do not file a schedule C. However, the 1099-MISC are using my LLC's EINs, even though they are disregarded entities. I think this is wrong given the above instructions.
2) Vanguard, who provides me with tax planning services at no charge, helped me set up my EINs and W9s for my LLCs. The 1099-DIV and 1099-B that I receive from vanguard uses the EIN. I think this is wrong.
3) Its been 3 years since I have created these LLCs, and I have a large stack of 1099s. I am worried that all of?
them need to be corrected. Some of the 1099s are from companies that went out of business. what do I do?
4) My IRS tax transcripts do not list the wage and income for anything that uses the LLC's EIN. If my SSN was linked to my EIN, wouldn't it be with my SSN's tax transcripts?
Thank you.
The instructions about filling out the 1099Misc are if YOU are filling them out to give to other people. Not for ones you get from someone else. You have been setting up multiple LLCs? You should see a CPA or tax accountant. One thing I've been meaning to ask you is when you set up the Single Member LLC did you select it to be an S corp? If you did that makes a difference in all this.
Hi. My single-member LLC is not an S corp. It is not a partnership. It is not a corporation.
I agree that the instructions that I provided are based from the filer's point of view, but that is also my point. The filer was suppose to place my personal name, my personal address, and my SSN on the 1099s. Instead, they listed my business name, my business address, and my business's EIN. Based on the 1099 filer instructions, it seems that the filer did everything wrong except the dollar amount.
Thank you for your well thought reply. Let me offer the reasons why I am still confused, and to address your questions.
1) IRS W9 Instructions, Page 4, Part I: I copied it directly from the W9 in black italic font. The red font are my comments based on my understanding of the instructions. https://www.irs.gov/pub/irs-pdf/fw9.pdf
"If you are a single-member LLC that is disregarded as an entity separate from its owner, enter the owner’s SSN... The IRS makes it very clear that I am to use my SSN, and not to use my EIN. The next part adds a lot of confusion ... ( [by this previous text in the parenthese, the IRS means that if the disregarded LLC is owned by an LLC that is a corporation, and that corporation has an EIN, then use the corporations's EIN] Now, I suspect that a lot of people are now confused, so the IRS adds the the next sentence, and this sentence is repeating the first sentence of this paragraph.
It is the above instructions, that are terribly written, that cause a lot of problems. If I were to re-write it, I would say the following:
a) A single-member LLC that is also a disregarded entity can be owned by an individual, or owned by another LLC.
b) If the owner is an individual, then you must use the individuals SSN (even if the disregarded entity has an EIN, do not use it for IRS purposes)
c) If the owner is a Corporation, then use the corporations EIN.
d) If the owner is a different single-member LLC, and that LLC is also disregarded, then use the individual's SSN
I am not taxed as a corporation. I am taxed as an individual. For that reason, I also beleive that the 1099s need to use my SSN, and only my SSN.
======== The above covers the W9 ==================
Part 2: IRS Instructions on filling out a 1099. Please see
https://www.irs.gov/pub/irs-prior/i1099gi--2019.pdf
Section J. It states:
"For a single-member LLC (including a foreign LLC with a U.S. owner) that is disregarded as an entity separate from its owner under Regulations section 301.7701-3, enter the owner's name only on the first name line and the LLC's name on the second name line. For the TIN, enter the owner's SSN (or EIN, if applicable). If the LLC is taxed as a corporation, partnership, etc., enter the entity's EIN."
The EIN is only applicable if the owner is a corporation that has an EIN. In my case, I am a disregarded-enetity, so the IRS wants the 1099 in with my SSN, not the EIN. The IRS also states "if I am taxed as a corporation, then use the EIN". I am not taxed as a corporation.
============ The addresses the 2 key IRS instructional documents for disregarded entities ====
More helpful information:
1) I only use schedule E for the rental income. I do not use schedule C.
2) Vanguard helped me set up all of my EINs and W9s because I qualified for their help. The 1099-DIV and 1099-B that I receive from vanguard uses the EIN for the disregarded entities. I think this is wrong given the IRS instructions..
3) The IRS transcripts for my SSN does not show any of the income that was reported to my EINs. If the accounts were linked, wouldn't I see these statements under my SSN's tax transcripts?
4) If my 1099s are incorrect, how do I fix them? Note that a few of the filers are now out of business, there is no way to get the original filer to submit a correction.
Thank you
Thank you.
1) IRS W9 Instructions, Page 4, Part I:
Has absolutely nothing what-so-ever to do with completing the 1099-MISC in any way, shape, form or fashion. But for the W-9, you apparently didn't bother to read what comes immediately after in parenthesis.
If you are a single-member LLC that is disregarded as an entity separate from its owner, enter the owner’s SSN (or EIN, if the owner has one.) .
Then in your own post above referring to "section J" you yourself even included where it clearly states the same about using the EIN, in parenthesis.
1) I only use schedule E for the rental income. I do not use schedule C.
Whew! Thanks for clarifying that. I see folks screw that up quite frequently with a false belief that putting their rental into an LLC will somehow protect them, when in most cases it does exactly the opposite.
2) Vanguard helped me set up all of my EINs and W9s because I qualified for their help.
Glad that's clarified now. I was afraid the rental may have been an IRA asset, which would mean you would not under any circumstances be reporting it on your personal tax return.
3) The IRS transcripts for my SSN does not show any of the income that was reported to my EINs. If the accounts were linked, wouldn't I see these statements under my SSN's tax transcripts?
Nope, not at all. You have to pull that from the transcripts for the EIN, not transcripts for the SSN. The IRS keeps things separate on the public side, so that someone with your EIN or your SSN, could not possibly pull your "total" tax records on the public side.
4) If my 1099s are incorrect, how do I fix them?
Again, they are not incorrect. There is nothing to fix here. However, if you keep insisting that you are the expert here and know more than the IRS, feel free to seek professional help. I'm sure a professional will have no problem taking your money to fix something that was never broken in the first place.