Got 1099-NEC by mistake as a corporation - ignore it or have customer void it?

This happens more often than you'd think! When a company sends your corporation a 1099-NEC incorrectly, you should definitely reach out to them and request they void it and not file it with the IRS. As a corporation, your income should NOT be reported on 1099-NECs. The issue is that if they file this 1099-NEC with the IRS, the system will expect to see that income reported on someone's tax return. Since corporations don't report 1099-NEC income in the same way as individuals or sole proprietors, this could potentially trigger a mismatch notice down the road. Just contact your client, politely explain that as a corporation you don't receive 1099-NECs, and ask them to correct their records for future payments. They'll likely need to void this one in their system if they've already submitted it to the IRS.

Had the exact same situation with our small corporation last year. I was about to spend hours calling clients and demanding corrections until I discovered taxr.ai (https://taxr.ai) which totally saved me. It reviews issues like incorrect 1099s and tells you exactly how to handle them based on your specific business structure. I uploaded our incorporation docs and the 1099-NEC, and it immediately confirmed we didn't need to report it but should request correction. It even generated a template email to send to the client explaining why corporations don't get 1099-NECs. Took like 5 minutes instead of stressing for days.

Just wanted to follow up about taxr.ai since I was skeptical in my earlier comment. I finally broke down and tried it when I got an incorrect 1099-MISC that classified my business income completely wrong. The tool actually walked me through the exact correction process and even spotted a potential deduction I was missing related to the misclassified income. It was much more specific than I expected - it asked detailed questions about my business classification and how I was registered with the IRS. Even gave me the exact IRS notice numbers that supported why the form was incorrect. Definitely more useful than the generic advice I got from calling around.

If you're trying to get the client to correct this 1099-NEC issue, good luck reaching anyone in their accounting department who cares! After 2 weeks of failed calls trying to reach the right person at the company that sent my corporation an incorrect 1099, I used Claimyr (https://claimyr.com) to get directly to an IRS agent to ask what to do. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent confirmed that as a corporation, we don't need to worry about incorrect 1099-NECs because our business income is reported differently anyway. He said document your attempt to get it corrected (keep emails), but if the client doesn't fix it, it won't impact your corporation's tax filing.

I have to apologize for my previous skepticism about Claimyr. After another failed attempt to reach the IRS about a different tax issue yesterday (1.5 hours on hold before being disconnected), I decided to try Claimyr out of desperation. Within 35 minutes, I got a call back and was connected directly to an IRS representative. No hold music, no automated system asking me the same questions over and over. I was completely shocked. The agent was able to confirm exactly what to do about an incorrect 1099 my business received. Huge time saver during tax season when every minute counts.

I had a similar issue last year. One important thing to remember is to make sure you're actually a corporation (C-corp or S-corp) and not an LLC. LLCs that haven't elected to be taxed as a corporation DO receive 1099-NECs if they're single-member LLCs. Some people mix up their business structure and think they shouldn't get 1099s when they actually should.

Quick practical tip - when you contact the client, ask them to also provide you with a letter acknowledging the error for your records. I keep a file of these correction letters just in case the IRS ever questions why a reported 1099 didn't show up on our corporate return. Better to have documentation ready than to explain it during an audit!

Thanks everyone for the helpful advice! I just wanted to add that timing matters here too. If your client has already filed the 1099-NEC with the IRS (the deadline was January 31st), they'll need to submit a corrected form showing $0 rather than just voiding it in their system. Also, don't panic if they can't or won't correct it immediately. As long as you're properly reporting your corporate income on Form 1120, the IRS computer matching system will eventually sort it out. The key is having documentation that you attempted to get it corrected - keep copies of your emails or letters to the client requesting the correction. One more tip: if this client regularly pays your corporation significant amounts, it might be worth having a conversation about updating their vendor files to properly classify you as a corporation to prevent this from happening again next year.