It is late February and you realize the Form 1099 you received is in error. In fact, it overstates your income by several thousand dollars. What should you do?

Gather your facts: Put yourself in the shoes of the vendor, bank or investment company representative. Gather evidence they will need to support your claim to correct the tax form. This includes receipts, e-mails, and statements. Have your account number handy as well.

Contact the vendor: Contact the vendor as soon as you discover the error and ask them to reissue the statement or provide you with a corrected form. Start with a phone call, then put your evidence in writing and send it to them via certified mail. Give the vendor a reasonable, yet concrete, time frame to correct the error. You do not want to wonder when a correction is coming, so keep control of the timing for a correction if at all possible.

Written confirmation: If the vendor agrees with your change, ask for a letter from them that outlines the correction. File this letter with your tax return to help you defend against a potential audit.

Tell the IRS: After a reasonable attempt to correct the error with no progress, contact the IRS to inform them of the failure to correct your information.

File an extension: If you believe a correction is on the way, you may wish to file a tax extension. Remember, you will still need to pay any tax owed by the original due date. If you do not have assurance of a correction, file your tax return with correct information and provide documentation that outlines the reporting error.

What? This form 1099 is wrong!: Article from CK Books & Billing. This article has been reprinted with permission from CK Books & Billing