Sometimes, you might receive income, but no 1099 form. This can happen for various reasons. It’s your responsibility to report all income to the IRS. You may need to write a letter to explain why a 1099 is missing. This letter helps avoid potential tax issues.
Writing this letter can feel tricky. Don’t worry! We’ve got you covered. We will provide sample letters. These examples will guide you. They will make the process much easier.
We’ll share different templates. Each template addresses a specific situation. You can adapt them to fit your needs. Get ready to simplify your tax communication.
Sample Letter To Irs Explaining 1099 Not Included
[Your Name/Company Name]
[Your Address]
[City, State, Zip Code]
[Date]
Internal Revenue Service
[IRS Address]
[City, State, Zip Code]
**Subject: Explanation for Missing 1099 Form**
Dear Internal Revenue Service,
I am writing to explain why I did not include Form 1099 with my tax return for the [Tax Year] tax year.
[Choose ONE of the following reasons and adapt it to your specific situation. If none apply, create your own explanation.]
* **Option 1 (Income Below Reporting Threshold):** The income I received from [Payer Name/Company Name] was less than the $20,000 and more than 200 transactions reporting threshold for Form 1099-K. The total amount was $[Amount].
* **Option 2 (Misclassification):** I believe the payment I received from [Payer Name/Company Name] was incorrectly classified as non-employee compensation. This income should have been reported as [Explain the correct classification, e.g., a gift, reimbursement, etc.]. I have attached [Supporting documentation, if any].
* **Option 3 (Form Not Received):** I did not receive Form 1099 from [Payer Name/Company Name]. I have contacted them to request a copy. I expect to receive it by [Date]. If I do, I will amend my return immediately.
* **Option 4 (Other Reason):** [Clearly and concisely explain your reason for not including the 1099. Be specific.]
I have accurately reported all of my income on my tax return to the best of my knowledge.
Thank you for your understanding.
Sincerely,
[Your Signature]
[Your Typed Name]
[Your Phone Number]
[Your Email Address]
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How to Write Letter To Irs Explaining 1099 Not Included
Subject Line: Be Direct and Unambiguous
The subject line is your first, and perhaps only, chance to grab the IRS’s attention. Don’t obfuscate! Make it explicitly clear what the letter concerns.
- Example: “1099-NEC Omission Explanation – [Your Name] – [Your SSN or EIN]”
- Avoid vague phrasing that might get lost in the bureaucratic shuffle.
Salutation: Formal but Approachable
While you might feel like you’re under scrutiny (and you are), maintaining a respectful tone is paramount. Avoid unwarranted familiarity, but don’t be overly stilted either.
- Acceptable: “Dear Internal Revenue Service,” or “To Whom It May Concern:”
- Resist the urge to use colloquialisms or overly casual greetings.
Opening Paragraph: Concisely State the Issue
Dive straight in. The IRS processes a staggering volume of correspondence daily; your opening paragraph should immediately articulate the reason for your missive.
- Clearly state that you are writing to explain the omission of a specific 1099 form.
- Include the tax year in question and a brief, neutral description of the income type.
- Example: “I am writing to explain the inadvertent omission of a 1099-NEC form from my [Year] tax return, related to freelance income.”
Body Paragraph(s): The Nitty-Gritty Explanation
This is where you meticulously detail why the 1099 wasn’t initially included. Honesty and transparency are your most potent weapons.
- Explain the circumstances surrounding the omission. Were you unaware a 1099 would be issued? Did it arrive late? Was it lost in the mail?
- If you received the income but genuinely believed it was below the reporting threshold, articulate that rationale.
- If you’ve already amended your return to include the income, state that clearly and provide the date of the amended filing.
- Proactively provide supporting documentation if available (e.g., bank statements, invoices).
- Avoid embellishments or convoluted explanations. Stick to the pertinent facts.
Quantify the Omission: Giving Them the Numbers
Don’t make the IRS hunt for the missing figures. Explicitly state the income amount associated with the unincluded 1099.
- Clearly state the exact amount of income reported on the 1099.
- If possible, provide the payer’s name and Employer Identification Number (EIN).
- This demonstrates thoroughness and a willingness to rectify the situation.
Assurance of Future Compliance: Promising Better Behavior
Reassure the IRS that you’re taking steps to prevent similar oversights in the future. A little proactive contrition can go a long way.
- State that you understand your obligations regarding income reporting.
- Briefly mention any changes you’re implementing to ensure future compliance (e.g., improved record-keeping, consulting with a tax professional).
- Express your commitment to fulfilling your tax responsibilities accurately and punctually.
Closing: Courteous and Professional
End on a positive note, expressing your willingness to cooperate and providing your contact information.
- Acceptable Closings: “Sincerely,” “Respectfully,”
- Include your full name, address, phone number, and SSN/EIN.
- Offer your availability to provide further information or clarification if needed.
- Example: “Thank you for your time and consideration. Please do not hesitate to contact me if you require any further information.”
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Frequently Asked Questions: 1099 Not Included Explanation Letter
If you received a 1099 form and failed to include the associated income on your tax return, submitting a letter of explanation to the IRS is crucial. This FAQ section provides guidance on understanding and crafting an effective explanation.
Why did I receive a notice from the IRS about a missing 1099?
The IRS cross-references information reported on 1099 forms with the income you reported on your tax return. If there’s a mismatch, they will send a notice to inquire about the discrepancy.
What information should I include in my explanation letter?
Your letter should include your name, Social Security number or Employer Identification Number (EIN), the tax year in question, the payer’s name and TIN, the amount reported on the 1099, and a clear, concise explanation of why the income was not reported.
What are valid reasons for not including 1099 income?
Valid reasons may include the income being reported under the wrong TIN, the income being non-taxable (e.g., a return of capital), or the income being reported on a different tax form (e.g., Schedule C instead of a 1099). Provide supporting documentation where applicable.
What happens if I don’t respond to the IRS notice?
Failure to respond to the IRS notice may result in the IRS assessing additional tax, penalties, and interest based on the unreported income.
Where should I send my explanation letter?
Send your letter to the address provided on the IRS notice you received. Keep a copy of the letter and any supporting documentation for your records.