Sarah worked as a contractor for a Subcontractor and was sent on a business trip. According to the amounts on the 1099-MISC all expenses were reimbursed but were accounted for as income instead of expenses. Furthermore, the 1099-MISC overstated income but was not caught until later. When we filed our 2007 tax returns, we deducted the expenses from non-employee compensation. we did not acount for the overstated income during this filing as it was still unknown to us. Later in the year We recieved a letter from the IRS regarding this discrepency (as well as a discrepency on interest income from bank accounts associated to our children but to our SSNs). We then contacted the subcontractor and they responded by sending an updated 1099-MISC which fixed both the expense to income error and the overstatement of income. Do we need to refile our 2007 taxes, just a portion of them or file an amendment of some sort?
