S-Corp and 1099s

KkksMm1 · #1 (**permalink**) 02-04-2009, 02:34 PM

Some of my clients pay the S-Corp, where as some pay me personally and then send me 1099s. In the past I have put the income from the people paying the S-Corp onto that return, and the 1099s onto my personal return. is this the best way to do it? Can I put it all on the S-Corp return? My husband and I are the only ones who are shareholders in the S-Corp. Thanks so much for your help.

TaxGuru · #2 (**permalink**) 02-04-2009, 04:05 PM

There are a number of reasons why you should have all the customers pay the S Corporation and not you. One is the fact that the S corporation was created specifically to offer you protection against possible lawsuits.

Another reason is that the Business would clearly be in the name of the S corporation and not you. So, officially you should not be accepting any checks written on your name. In the future, you should not accept any checks in your name, instead have your all your customers write checks in your name.

As for the tax year 2008, if you have had any checks that were written in your name, simply deposit these into the S corporation's bank account. In the event you receive a 1099-Misc in your name for the amounts written on your name, you would claim this income on your Schedule C of your tax return and claim a deduction in the same amount, representing the checks that you had deposited into the S corporation name. The net impact would be Zero on schedule C.

KkksMm1 · #3 (**permalink**) 02-04-2009, 04:42 PM

Thanks for your reply. So just to clarify, doing it this way for 2008, all of the income will be shown on the S-Corp's tax return, where in previous years it would have been split between the two? Am I understanding correctly? Thanks so much.

Quote:

Originally Posted by TaxGuru

There are a number of reasons why you should have all the customers pay the S Corporation and not you. One is the fact that the S corporation was created specifically to offer you protection against possible lawsuits.

Another reason is that the Business would clearly be in the name of the S corporation and not you. So, officially you should not be accepting any checks written on your name. In the future, you should not accept any checks in your name, instead have your all your customers write checks in your name.

As for the tax year 2008, if you have had any checks that were written in your name, simply deposit these into the S corporation's bank account. In the event you receive a 1099-Misc in your name for the amounts written on your name, you would claim this income on your Schedule C of your tax return and claim a deduction in the same amount, representing the checks that you had deposited into the S corporation name. The net impact would be Zero on schedule C.

KkksMm1 · #4 (**permalink**) 02-05-2009, 04:24 PM

Where on the tax return do I claim the deduction for the amount of the 1099 income?

Quote:

Originally Posted by TaxGuru

There are a number of reasons why you should have all the customers pay the S Corporation and not you. One is the fact that the S corporation was created specifically to offer you protection against possible lawsuits.

Another reason is that the Business would clearly be in the name of the S corporation and not you. So, officially you should not be accepting any checks written on your name. In the future, you should not accept any checks in your name, instead have your all your customers write checks in your name.

As for the tax year 2008, if you have had any checks that were written in your name, simply deposit these into the S corporation's bank account. In the event you receive a 1099-Misc in your name for the amounts written on your name, you would claim this income on your Schedule C of your tax return and claim a deduction in the same amount, representing the checks that you had deposited into the S corporation name. The net impact would be Zero on schedule C.