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Frequently Asked Questions (FAQs) |
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Questions in 'Correcting Returns' |
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| How do I correct Information Returns (1099, 1098, 3921, 3922, 5498, W2G)? |
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| I have already sent in one correction file for our company, but just received a few more corrections. Should I create another correction client or just add to the existing correction client and then append the existing IRSTAX file? |
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| I need to prepare W2 corrections for different years for the same employer. Can I do this using a single filer? |
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| I filed my original returns electronically and have to make some corrections. Do I have to file these corrections electronically? |
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| I have a correction client whose 1099s contain CORR(G) and CORR(C) transactions. How do I file these electronically? |
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| Can I enter correction returns even though I never entered the originals? |
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| The IRS marked my correction file as BAD with the following message: If your file is a prior tax year, then position 6 of the 'T' record must be set to a 'P' and positions 2-5 of your 'T', 'A', and 'B' record(s) must contain the prior tax year. What am I doing wrong? |
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| I forgot to report a few 1099 returns. What should I do? |
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| How do I void a 1099 that was reported to IRS but shouldn't have been? |
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| What is the procedure for correcting prior year returns? |
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| Shouldn't the CORRECTION box be checked when printing corrected 1099s? |
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| How do I void a W2 that was reported to SSA but shouldn't have been? |
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| What are the CORR(G) and CORR(C) indicators and why are they disabled? |
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| I printed and mailed my 1099s, but, I haven't yet filed with the IRS. There are some corrections to be made. How should I proceed? |
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Answers |
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| How do I correct Information Returns (1099, 1098, 3921, 3922, 5498, W2G)? |
If you filed an Information Return with the IRS and later discover you made an error on it, you must
Correct it as soon as possible.
Furnish statements to recipients showing the correction.
File the correction with the IRS.
The steps required to correct an error depend upon the type of error.
If you discover an error in reporting the payer (not recipient) name and/or TIN.
Write a letter to IRS/IRB containing the following information:
Name and address of the payer
Type of error (including the incorrect payer name/TIN that was reported)
Tax year
Payer TIN
Transmitter Control Code (TCC), if applicable
Type of return
Number of payees
Filing method (paper, electronic)
Was Federal income tax withheld?
Send the letter to
Internal Revenue Service
Information Returns Branch
230 Murall Drive, Mail Stop 4360
Kearneysville, WV 25430
IRS will contact you with further instructions.
If you discover duplicate reporting or that a large percentage of incorrect information has been filed.
Contact the Information Reporting Customer Service Site at 1-866-455-7438 for further instructions.
If you discover an Error Type 1
Also referred to as a 1-Transaction error, Error Type 1 includes
Incorrect money amounts
Incorrect distribution code(s)
Incorrect check boxes
A return was filed when one should not have been filed.
1-Transaction errors require only one return to make the correction. Account Ability uses the CORR(G) check box to indicate a 1-Transaction correction (see Correcting Returns with Account Ability below).
If you discover an Error Type 2
Also referred to as a 2-Transaction error, Error Type 2 includes
No payee TIN (SSN, EIN, QI-EIN, ITIN)
Incorrect payee TIN
Incorrect payee name
Incorrect payee address
Wrong type of return was filed.
2-Transaction errors require two returns to make the correction, an IDENTIFYING return and a CORRECTING return. Account Ability uses the CORR(G) and CORR(C) check boxes to indicate the IDENTIFYING and CORRECTING returns, respectively. The IDENTIFYING transaction is simply the original return with the CORR(G) indicator checked and all dollar amounts set to ZERO. When IRS receives the IDENTIFYING and CORRECTING returns, the original is matched against the IDENTIFYING return and replaced with the CORRECTING return.
Correcting Returns with Account Ability
Account Ability facilitates the correction process by maintaining each filer's corrected returns under a distinct Client ID. When the Corrected Returns Only indicator, located on the General page of the client's master, is checked, the client is regarded as a Correction Client and all of the client's Information Returns are regarded as correction returns. The CORR(G) and CORR(C) check boxes appearing at the top of each Information Return's user interface will be enabled if, and only if, the client is a Correction Client.
1) Create a Correction Client
a) From the Module menu, select Client (Filer) Management.
b) Click once on the client whose returns are to be corrected.
c) Select Copy... from the File menu to display the Copy Filer dialog.
d) Enter a Client ID to be used for the Correction Client.
e) Check the Corrected Returns Only indicator.
f) Click OK.
The client you just created will be used for all of the selected client's correction returns.
NOTE: Account Ability displays the Correction Client's ID in green.
2) Open the Returns to be Corrected
a) Double-click the Correction Client's ID.
b) Open the Information Return to be corrected.
3) Enter your Corrections
a) Select New... from the File menu.
b) Check the CORR(G) check box.
c) Determine if you will require a 1-Transaction or 2-Transaction correction.
d) Click the Locator icon  displayed directly after the TIN Type field in order to locate the return to be corrected.
e) After locating the return, click either the 1-Transaction button or 2-Transaction button.
f) If 1-Transaction is clicked, the original return is displayed with the CORR(G) indicator checked. Simply enter and save your corrections.
g) If 2-Transaction is clicked, the IDENTIFYING transaction is automatically created. Next, a CORRECTING transaction is created but not posted. Enter and save your changes on the CORRECTING transaction.
After all corrections have been entered, print and mail all recipient copies, even the IDENTIFYING returns. If you plan to file with IRS on paper, print Copy A for IRS and Form 1096. If you plan to file electronically, you must append the CORR(G) and CORR(C) transactions to the IRSTAX file in two steps - first the CORR(G) transactions, next the CORR(C) transactions. The resultant IRSTAX file should be transmitted to the IRS FIRE System as a Correction file.
NOTES: For more information on correcting returns, see the IRS General Instructions selection on the User Manuals selection of the Help menu. |
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| I have already sent in one correction file for our company, but just received a few more corrections. Should I create another correction client or just add to the existing correction client and then append the existing IRSTAX file? |
There is no need to create another correction client. Although the same correction client can be used over and over again, you must ensure that the existing corrections do not get filed in duplicate.
To avoid the possibility of duplicate filing, follow these instructions prior to entering the new corrections:
a) Open the existing correction returns.
b) From the 'Tools' menu, select 'Clear Efile (Mag) Indicators'.
c) From the 'Tools' menu, select 'Set Print Indicators'.
d) Browse to the existing IRSTAX file and rename it to the filename assigned by the IRS FIRE System (e.g. CORR.TCCNO.8001, ORIG.TCCNO.8001, REPL.TCCNO.8001, etc.).
Now enter your new corrections. When done,
e) Print the Payer and Recipient Copies.
f) Create a new IRSTAX file containing only the new corrections.
NOTE: If you performed steps (b)-(d) above correctly, then only the new corrections will be printed and written to the new IRSTAX file. |
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| I need to prepare W2 corrections for different years for the same employer. Can I do this using a single filer? |
Although you can, it is not suggested. If a filer's W2C database contains multiple reporting years, the file cannot be accurately totaled. If you attempt to total such a file, the following message will be displayed,
File contains corrections for multiple reporting years and cannot be accurately totaled
This will definitely create problems if you need to generate transmittal W3C or create an electronic file pursuant to SSA MMREF-2 specifications.
Solution: Create a separate client (filer) record for each reporting year. The Copy selection on the Client (Filer) Management File menu facilitates the process by copying employer information -- you need only assign a new Client ID and change the Reporting Year. Then, enter your W2 corrections for each reporting year into the respective client's W2C database.
NOTES:
a) If you need to correct current year W2s that are already recorded within Account Ability, use the existing client (filer). You can then easily select W2s to be corrected from the existing W2 database.
b) If you plan to file electronically, you must prepare your W2REPORT (MMREF-2) file using the most recent release of Account Ability, regardless of the reporting year. You can, however, combine (append) various reporting years into a single reporting file. |
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| I filed my original returns electronically and have to make some corrections. Do I have to file these corrections electronically? |
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If you are filing more than 250 corrections, you must file them electonically. Otherwise, you can file on paper. |
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| I have a correction client whose 1099s contain CORR(G) and CORR(C) transactions. How do I file these electronically? |
a) From the 'File' menu of the correction client's 1099s, select 'Electronic Reporting'
b) Specify a destination drive
c) In the 'Type of File' group, select 'Corrected(G)'
d) Click 'OK' to write the IRSTAX file.
Repeat these steps, this time for the 'Corrected(C)' returns, making sure to 'Append' them to the existing IRSTAX file. The resulting IRSTAX file should now be submitted to the IRS as Correction returns.
NOTE: If you have to correct different types of Information Returns (1099, 1098, 5498, W2G) for various clients, you can append all of them to the same IRSTAX file. |
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| Can I enter correction returns even though I never entered the originals? |
Yes. When creating the client's record be sure to check the 'Corrected Returns Only' indicator on the 'General' page of the client's master record. Then, enter your correction returns as usual. Correction returns can be filed electronically or on paper.
TIP: If you are unfamiliar with the correction procedure for Information Returns, you should refer to IRS Publication General Instructions for Forms 1099, 1098, 5498, and W-2G. If you are unfamiliar with the correction procedure for W2s, you should refer to IRS Publication Instructions for Forms W-2c and W-3c. |
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| The IRS marked my correction file as BAD with the following message: If your file is a prior tax year, then position 6 of the 'T' record must be set to a 'P' and positions 2-5 of your 'T', 'A', and 'B' record(s) must contain the prior tax year. What am I doing wrong? |
You are attempting to file prior year corrections using a prior year version of Account Ability. Although this is fine for printing prior year correction copies, efilers must always use the most recent version of Account Ability to prepare the correction file that gets uploaded to the IRS FIRE System.
IMPORTANT: When setting up your correction client be sure to specify a reporting year equal to that of the returns being corrected.
Prior to creating the IRSTAX file, ensure that the destination drive does not contain a copy of the IRSTAX file that was marked BAD. If it does, simply delete it!
NOTE: Since your last correction file was marked BAD, be sure to check the 'Replacement' indicator appearing at the bottom of the Electronic Reporting Options dialog.
The resulting IRSTAX file should be uploaded to the IRS FIRE System as a REPLACEMENT file, not a CORRECTION file. You will have the opportunity to select the BAD file from a list that the IRS FIRE System displays.
If all goes well, your correction file should be marked 'Good' and the BAD file as 'REPLACED'. |
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| I forgot to report a few 1099 returns. What should I do? |
Create and print a 1099 for each recipient you originally overlooked. Then, submit these 1099s to the IRS as original returns, not corrections.
In order to avoid the possibility of filing duplicate returns for those recipients who were already reported, the following procedure is highly recommended:
a) Open the 'Client (Filer) Management' module.
b) Click once on the client to be used.
c) Select 'Copy...' from the 'File' menu.
d) Assign a temporary 'Client ID'.
e) Click OK to create a temporary client.
Now, enter the 1099s you overlooked using the temporary client. Print and mail these returns as usual. Next, file them with IRS either electronically or on paper, as originals. Finally,
f) Open the original filer's 1099s.
g) Select 'Import -> Another Client's Returns' from the 'File' menu.
h) Select the temporary client's returns.
When done, your original client will contain the new returns. You can now safely delete the temporary client. |
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| How do I void a 1099 that was reported to IRS but shouldn't have been? |
This requires a 1-transaction correction (CORR-G) with zero in each of the amount boxes. Ensure that the recipient's name, address, taxpayer id, and account number are identical to that entered on the original 1099. Print a copy for the recipient's records.
NOTE: The above procedure applies to all Information Returns.
NOTE: Some users think that checking the VOID box will suffice to VOID the return. This is not true. Returns marked VOID are neither printed, tallied, nor filed with IRS. |
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| What is the procedure for correcting prior year returns? |
For illustrative purposes, the procedures that follow assume a reporting year of 2003. For years other than 2003, simply replace all occurrences of 2003 with the year to be used.
To Correct Annual Wage Reports (W2, W2C)
Complete Form W2C for each employee using the current year's software. Make sure you enter 2003 in the 'Year Corrected' field on Form W2C. Print and mail the employee copies. Either print or efile the SSA copies.
To Correct Information Returns (1099, 1098, 5498, W2G)
In order to correct a filer's Information Returns, a correction client must be used. A correction client is one whose 'Corrected Returns Only' indicator is set. When setting up the correction client be sure to use the current year's software and set the 'Reporting Year' to 2003.
Enter all of your 1- and 2-Transaction corrections into this new filer's Information Returns. When done, you can safely e-file these corrections as usual. |
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| Shouldn't the CORRECTION box be checked when printing corrected 1099s? |
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The CORRECTION box will only be checked when printing CORR(G) transactions. |
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| How do I void a W2 that was reported to SSA but shouldn't have been? |
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File Form W2C with SSA. Make sure that the previously reported amounts reflect those of the original W2 and the corrected amounts are all zero. |
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| What are the CORR(G) and CORR(C) indicators and why are they disabled? |
The CORR(G) and CORR(C) indicators, displayed only on Information Returns (1099, 1098, 5498, W2G), are used strictly by Account Ability's CORRECTION returns procedures. Consequently, the selected client's 'Corrected Returns Only' indicator, found on the 'General' page of the client's master record, must be checked in order for these fields to become active.
The CORR(G) indicator specifies either a one transaction correction or the IDENTIFYING transaction of a two transaction correction.
The CORR(C) indicator specifies the CORRECTING transaction of a two transaction correction.
NOTE: The CORRECTION box at the top of Form 1099, 1098, 5498 and W2G applies strictly to CORR(G) returns.
For more information on correcting Information Returns, refer to the IRS Publication General Instructions for Forms 1099, 1098, 5498, and W-2G. |
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| I printed and mailed my 1099s, but, I haven't yet filed with the IRS. There are some corrections to be made. How should I proceed? |
Since you haven't yet filed with IRS, it is only necessary to send corrected returns to the recipients. When you do file with IRS, simply send the entire file as if it were never corrected.
Follow these steps:
a) Open the Client (Filer) Management module
b) Click once on the filer containing the original returns to be corrected
c) Select 'Edit' from the 'File' menu to open the 'Edit Filer' dialog
d) Check the 'Corrected Returns Only' indicator and click 'OK'
e) Now open the client's 1099 returns to be corrected
f) Select 'Set Print Indicators' from the 'Tools' menu to mark the entire file as already printed
g) Enter your corrections making sure to check the 'CORR(G)' indicator and uncheck the 'Printed' indicator appearing at the top of each corrected return
h) After all corrections have been made, print the returns. Only those returns whose 'Printed' indicator is not checked are printed. Each printed return should have its CORRECTED indicator checked
i) Mail the corrected returns to the recipients and print the payer's copies
j) Click your mouse in the payer's name and address area to open the 'Edit Filer' dialog
k) Uncheck the 'Corrected Returns Only' indicator and click 'OK'
l) Select 'Clear Corrected Indicators' from the 'Tools' menu
That should do it! The resulting file contains original returns, including corrections, and should be filed with IRS as 'Original' returns. |
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