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Received erroneous 1099-NEC tax form

Forum|Forum|4 years ago
April 5, 2022
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I received a 1099-NEC tax form by FusionCash saying I made over $700 in 2021 but I haven't logged in their site for over 10 years and made no money since then. I emailed their website support from my account and got no response. I also snail-mailed the company address with no reply either. What am I suppose to do? Contact the IRS about this? Or should I include this in my tax return? Or should I ignore it?

Not A Product Question

Best answer by Hal_Al

If you received an erroneous 1099-NRC, You have several choices:

Ideally, you get a corrected 1099-NRC from the payer (showing $0)
Don't report it on your return. Attach a copy of the 1099 and a statement explaining the circumstances. You can't e-file. From the IRS instructions for form 1099-Misc: Form 1099-MISC incorrect? 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.
Report the Income on schedule C and take a deduction under other expenses, call it something like "erroneous recipient adjustment"
Report the income as misc line 8z, Schedule 1 income (enter in TurboTax at the 1099-NEC screen and identify it as sporadic income). Then enter a line 8z deduction, for the same amount. In TurboTax (TT), enter at:
- Federal Taxes tab
- Wages & Income
Scroll down to:
-Less Common Income
-Misc Income, 1099-A, 1099-C
- On the next screen, choose – Other reportable income - Answer yes to Any other Taxable Income -On the next screen, Enter the number with a minus sign (-) in front. Briefly explain at description. Call it something like "erroneous 1099-NEC received"
Do nothing and hope you can explain it away when & if the IRS contacts you

I would do # 4, the same as @ThomasM125 suggested.

T

ThomasM125

You can report the income and add an expense or deduction for the same amount to cancel it out.

When you report it in TurboTax, indicate that it isn't part of your main job and that it won't recur and it will show up as Other Income on your tax return. Then, follow these instructions to enter a negative adjustment to cancel it out:

- Go to the Income and Expenses section of TurboTax

- Choose Less Common Income

- Choose Miscellaneous Income, 1099-A, 1099-C

- Choose Other reportable Income

- Enter a description and the amount of your adjustment as a negative number

You could also just not report it, but then you may get an assessment from the IRS down the road for additional tax and you will have to explain what happened to get it reversed.

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Hal_AlAnswer

Employee

If you received an erroneous 1099-NRC, You have several choices:

Ideally, you get a corrected 1099-NRC from the payer (showing $0)
Don't report it on your return. Attach a copy of the 1099 and a statement explaining the circumstances. You can't e-file. From the IRS instructions for form 1099-Misc: Form 1099-MISC incorrect? 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.
Report the Income on schedule C and take a deduction under other expenses, call it something like "erroneous recipient adjustment"
Report the income as misc line 8z, Schedule 1 income (enter in TurboTax at the 1099-NEC screen and identify it as sporadic income). Then enter a line 8z deduction, for the same amount. In TurboTax (TT), enter at:
- Federal Taxes tab
- Wages & Income
Scroll down to:
-Less Common Income
-Misc Income, 1099-A, 1099-C
- On the next screen, choose – Other reportable income - Answer yes to Any other Taxable Income -On the next screen, Enter the number with a minus sign (-) in front. Briefly explain at description. Call it something like "erroneous 1099-NEC received"
Do nothing and hope you can explain it away when & if the IRS contacts you

I would do # 4, the same as @ThomasM125 suggested.