How do you know the 1099 list an AI gave you is right?
An AI drafts your client's 1099-NEC list and your workpaper disagrees. Find the three mistakes with the tick marks of a workpaper.
Sample page. Your Maestro, an AI, answers your free questions about this page.
Before you start, one quick question. It doesn't count for anything: it's your starting point, and you'll see the same kind of question again at the end of the course.
It's January, and 1099 season at the firm. Mesquite Creek Auto Parts, a client in Round Rock, Texas (fictional, like everything in this course), sends you its 2026 vendor payment report, with each payee's entity type copied from its Form W-9. You hand the file to an AI and ask: "Which vendors need a 1099-NEC for 2026, and how much goes on each?" It answers in seconds: 10 forms, $25,410.00 in total.
Your workpaper says 5 forms, $18,050.00. That's five extra forms and $7,360 of nonemployee compensation that would be reported to the IRS under your client's EIN.
The AI didn't make anything up. It read the file, wrote a short program, ran it without an error and gave you what the program printed. The problem is what it decided without telling you: which payments count, who counts as one payee, and what threshold applies. Those decisions show up in its own work, if you ask for it. Here is what it did. Before you read on, decide for yourself whether its work backs up its answer.
Three tick marks before you sign
On a workpaper you mark what you checked: footed, traced, agreed to source. With an AI figure you do the same thing, with three questions. They're the same for any assistant (ChatGPT, Copilot in Excel, Claude) and any file.
⊘ What is a row?
A row in the payment report isn't always a payment you report. Here 6 of the 78 were paid by credit card, $3,100 in all. The card processor reports those on Form 1099-K, so they stay off your 1099-NEC. The AI summed them as if they were checks.
⧉ Is anyone in twice?
The threshold applies per payee, and a payee is a taxpayer, not a spelling. 14 names but only 13 TINs means one payee was entered under two names. Here it's Ortiz Electric and Ortiz Electric Services, same TIN.
÷ Over what threshold?
For payments made after December 31, 2025, the 1099-NEC threshold is $2,000 per payee, not $600. An assistant trained on older material will often reach for $600 without saying so.
With the three marks, the difference ties out to the dollar:
| Step | Forms | Reported |
|---|---|---|
| What the AI said | 10 | 25,410.00 |
| ⊘ Drop the 6 card payments ($3,100): Westside Courier falls off | 9 | 22,310.00 |
| ⧉ Ortiz Electric and Ortiz Electric Services are one TIN | 8 | 22,310.00 |
| ÷ $2,000 threshold: Rivera ($1,800), Nguyen ($1,500) and Patel ($960) fall off | 5 | 18,050.00 |
| Reviewed 1099-NEC list | 5 | 18,050.00 |
The order matters more than it looks. If you fix the card payments and the threshold but leave the AI grouping by name, each Ortiz name is under $2,000 ($1,200 and $1,100) and you get 4 forms: you'd miss a payee who was paid $2,300. Over-filing and under-filing are both on you.
None of the three is an arithmetic mistake. The program added correctly. It answered a different question: "which names were paid $600 or more for services?" That's why the review isn't re-adding. It's asking what got added. If the method column was right there, why didn't the AI leave out the card payments?
Note: What the AI got right, and the filing date
The AI did make two good calls: it left out payments for parts and merchandise, which don't go on a 1099-NEC, and it left out C and S corporations, which are generally exempt. Payments to attorneys are the exception: they're reported even when the law firm is a corporation. Nonemployee compensation goes in box 1a of Form 1099-NEC, and the form is due to the IRS by January 31. When that falls on a weekend, the due date is the next business day, so forms for 2026 payments are due February 1, 2027.
Try it
The AI's file is already loaded in the table data (78 rows, synthetic data). The code starts where the AI did: services only, no corporations. Run it with Run (or Ctrl + Enter, ⌘ + Enter on a Mac) and you'll see the AI's 10 forms. Then change the three lines marked Your turn: drop the card payments, group by TIN instead of name, and use the 2026 threshold. Each line you change has a comment. If you get stuck, your Maestro is right beside you.
If you got to 5 forms and $18,050.00, you just did what a reviewer does: you didn't trust the sentence, you checked what it counted. The rest of the course is the same move on more of the work you sign: invoices that get paid later, reconciliations that "tie," sales tax on the wrong base, margins with the wrong denominator, and a full month-end close.
The next time an AI gives you a tax figure, ask it first how many rows it read, how many it left out and why, and which column and rule it used. Help me ask the AI for that.