How Do I Refute/Dispute”Nonemployee Compensation” on a 1099 I received?
I listened to a few podcasts here on income tax, and understand I probably should dispute/refute the amount listed in “Nonemployee Compensation” block on a 1099-NEC I received from the person who traded me money for my services, as it is not ” gross income.” Can anyone help me figure out exactly how to do that?
To correct a 1099, you would typically sent a copy of the 1099 with your filing, correcting the information such as “non employee compensation.” There’s a checkbox at the top that says “CORRECTED”, indicating that this is a corrected version of an existing filing. You can see the form here. It’s recommended to also make a statement below the form to this effect.
“This document is presented to dispute and correct an erroneous form 1099-X known to have been submitted to the IRS by the party identified as the “PAYER” above. I did not receive any income from a “trade or business” from the “PAYER”.
Some people will add an extra statement that this is declared to be true under penalty of perjury and sign it, although it should be enough that it’s included with your filing or cover letter that states that it is true under penalty of perjury.
For reference, you can see in the form instructions that the 1099 forms are only used to report income from a “trade or business.”
Do not sign anything under penalty of perjury unless you understand what these words mean, what you are submitting, and can confirm them to be true.
