Avoid 1099 Reporting Mistakes: A Halloween Compliance Guide
As 1099 reporting season creeps closer, even experienced accounts payable teams can fall for a few compliance “tricks.” 1099 reporting mistakes such as missing W-9s, incorrect TINs, or late submissions can all come back to haunt you – and lead to IRS penalties that no one wants to face.
This Halloween, make sure your 1099 process is all “treats” and no “tricks.” Here’s how to avoid the most common 1099 reporting mistakes and keep your AP operations compliant before year-end.
1. The Trick: Incomplete or Outdated Vendor Information
The Treat: A clean, verified vendor master file
Missing or outdated vendor information is one of the biggest sources of 1099 reporting errors. Without correct names, addresses, and TINs, your forms could be rejected or trigger IRS penalties.
How to avoid it:
- Audit vendor records early in the reporting season.
- Use TIN matching and W-9 validation to ensure accuracy.
- Flag incomplete records and follow up immediately with vendors.
2. The Trick: Misclassified Payments
The Treat: Clear payment categories and well-trained staff
Not every payment requires a 1099, and not every 1099 form is the same. Confusing 1099-NEC and 1099-MISC, or misclassifying contractor vs. employee payments, can lead to compliance issues.
How to avoid it:
- Train AP staff on payment classifications.
- Maintain clear internal documentation for recurring vendor payments.
- Review IRS guidelines for 1099 reporting thresholds and categories.
3. The Trick: Manual Data Entry Errors
The Treat: Automation and audit trails
Manual entry is a breeding ground for mistakes — from typos to duplicate records. These small errors can create big headaches when reporting to the IRS.
How to avoid it:
- Automate vendor data collection and 1099 form preparation.
- Use software that provides audit trails for easier review and reconciliation.
- Schedule periodic data quality checks before year-end.
4. The Trick: Missing Deadlines
The Treat: A proactive reporting calendar
Late filing is a surefire way to invite penalties. Waiting until the last minute to prepare forms can result in rushed, error-prone submissions.
How to avoid it:
- Establish internal deadlines well before official IRS submission dates.
- Build in time for verification, approvals, and corrections.
- Communicate deadlines clearly with your AP team and finance leadership.
5. The Trick: Ignoring Vendor Communication
The Treat: Transparent vendor engagement
Failing to confirm vendor details early can lead to incomplete or incorrect 1099 forms. This is especially risky if vendors have multiple addresses or recently changed TINs.
How to avoid it:
- Reach out to vendors early in the year for updated W-9s.
- Verify any changes in vendor information before filing.
- Keep communication records to support compliance audits.
Conclusion
1099 reporting season doesn’t have to be scary. With proactive planning, accurate vendor data, and the right automation tools, accounts payable teams can turn potential “tricks” into smooth, compliant “treats.”
By addressing the most common 1099 reporting mistakes now, you’ll save time, reduce risk, and ensure your year-end filing is ghost-free.
Take Control of 1099 Reporting
Join our upcoming 1099 Reporting Updates Training Workshop for step-by-step guidance, practical tips, and live Q&A with 1099 experts. Walk away confident that your year-end reporting will be accurate, compliant, and hassle-free.
Secure your spot today and turn 1099 reporting from a “trick” into a treat!