Filing 1099 and W-9 forms might feel like paperwork, but even small errors can lead to IRS notices, backup withholding, or penalties. These forms are how the IRS tracks payments made to contractors—and how businesses prove compliance.
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Here are the most common W-9 and 1099 mistakes that can cost you—and how to avoid them.
What Are the Most Common W-9 Mistakes?
Using the wrong Taxpayer Identification Number (TIN)
A mismatch between the contractor’s name and TIN can trigger a “B Notice” from the IRS, requiring you to correct and resubmit.
Failing to collect a W-9 before payment
Always get the form before sending any money. Otherwise, you may not have what you need for year-end reporting.
Requesting the wrong business type
The W-9 has a checkbox section for entity type (LLC, sole prop, etc.). If the contractor marks the wrong box, it may affect your 1099 reporting.
Not updating the W-9 when info changes
W-9s aren’t one-and-done. If your contractor changes names, addresses, or business structure, you’ll need a new one.
What Are the Most Common 1099-NEC Mistakes?
Missing the deadline (January 31, 2025)
Late filings result in IRS penalties that increase the longer you wait.
Filing for payments under $600 unnecessarily
You don’t need to send a 1099-NEC unless you paid a contractor $600 or more during the calendar year.
Using the wrong version of the form
Make sure you’re using the current 1099-NEC for 2024 payments (not an old one).
Incorrect contractor info
Misspelled names, wrong TINs, or out-of-date addresses are all red flags.
Sending a 1099 to a corporation when it's not required
Most corporations don’t need 1099s—except for lawyers and healthcare providers.
How Do These Mistakes Affect You?
You might get a CP2100 notice(aka a "B Notice") from the IRS if a name/TIN combo doesn’t match their records.
You could owe penaltiesranging from $60 to $310+ per incorrect or late form.
You may need to start backup withholdingat 24% if errors aren’t corrected.
You risk a small business audit, especially if the mistakes are repeated or appear across multiple contractors.
Frequently Asked Questions
What happens if I don’t send a 1099-NEC by the deadline?
The IRS will likely assess a late penalty, which increases over time. File as soon as possible to minimize the fee.
How do I fix a 1099 or W-9 after it’s submitted?
For 1099s, file a corrected form with the IRS and resend it to the contractor. For W-9s, just ask the contractor to fill out and resubmit an updated version.
Do I need to send a 1099 to an LLC?
Yes, if it’s a single-member LLC or taxed as a sole proprietorship. Not if it’s taxed as a corporation (unless it’s a lawyer or medical provider).
Can I just skip sending a 1099 if I don’t have the contractor’s W-9?
No. You may need to start 24% backup withholding and still file the 1099 to the best of your ability.
Want to Avoid IRS Notices This Year?
Sam’s Listconnects you with experienced accountants who specialize in contractor compliance, small business tax filings, and proactive support to help you stay in the clear.Find a professional who knows the drill!
You might also like:
- Small Business Accounting Essentials: Streamline Your Finances
- How to Fill Out a 1099-NEC Form for Contractors (2025 Guide)
Author: Kimi, Co-founder of Sam's List
Kimi writes about what she's learning while building Sam's List and shares honest takeaways from her conversations with accountants and financial advisors across the country. None of this is financial advice—just the stuff most people wish someone told them sooner.
