In Advantage Financial, corrections to 1099 reporting information may be entered on the 1099 Reported Income (1099R) table (either directly or via the M1099 document), or they may be entered directly into 1099 Convey (third party forms generation tool). As the 1099R table tracks the consolidated income before and after it is reported to the IRS, making such corrections within Advantage provides for an audit trail of changes made to 1099 information both before and after information is reported to the IRS.
When an existing record is corrected on 1099R or using the M1099 document, a new record will be generated with the current record set to True and the original record is updated to False. In addition, the Apply Corrections link on the original record will be disabled. Therefore, if there are multiple records for a TIN Number for a Type of Return, corrections can only be applied to the most recent information processed (for example, the most current record).
Any correction to existing reported income will be either Type 1 or Type 2 correction. Type 1 and Type 2 corrections are distinguished as follows –
Type 1 – It includes changes in name or address fields, incorrect boxes (income should have been reported in box 2 instead of 3), incorrect money amount and if a form was submitted in error.
Type 2 – It includes change in TIN, TIN Type and Form Type. If Name and Address fields both are modified in the same submission then it will also be considered as Type 2 correction. For example, when Name was modified, it will be considered as Type 1 correction. Then if any of the address fields, such as City, are corrected then it will be considered as Type 2 correction if they both were corrected in one submission to the IRS. This is true if both changes were made by the same user/time or different users/time. The net changes are determined at the time Offline 1099 Process was executed.
If a correction is made that is of Type 2 and then a subsequent change is made that is of Type 1, the net changes will be considered as a Type 2 correction. If changes are made to a record that is neither Type 1 nor Type 2 (i.e., Comments), then no corrected form should be produced. Also, changes to fields that are not classified as Type 1 or Type 2 should not impact the correction type. For example, a name change is made and then a Comment is added to the same record, the record will be classified as Type 1 correction. The addition of Comments should not change the correction type. Based on whether it is Type 1 or Type 2 correction, the Correction indicator will be determined and updated in Export txt files after running the correction job.
With the exception of the 'Corrected” Processing Mode, all other Processing Modes only select records from 1099R that meet or exceed the threshold established on the TINC table. If you need to change the dollar amount of a record on the 1099 Reported Income table after a form has been issued to an amount that does not meet the threshold established for the Type of Income, you need to do it one of two ways:
Change the value after you have run the Offline 1099 Process in Magnetic Media Mode so that it will be picked up and a corrected form is generated when the process is run in Corrected Mode.
Manually change the amount in the 3rd Party Forms generation tool.