My wife started an S-corp in 2015 and worked as a contractor. The company she contracted for reported her payments to the IRS under her SSN (1099-MISC) rather than her S-corp EIN (not sure if this is standard practice or an error on their part). We didn't realize that was important at the time since she had a CPA handling her S-corp taxes and didn't report that $ on our personal income taxes. Just received a nasty-gram from the IRS wanting taxes, underpayment penalty, and interest on the unreported "non-employee compensation". The amount reported is identical to the gross receipts filed on her 1120S so I'm pretty sure everything is okay except that we need to somehow show that the 1099-MISC $ was actually passed directly to the S-corp and appropriate taxes paid there. Any advice on what we need to do? I assume it's not as simple as sending a copy of the 1120S and letter explaining the discrepancy. They'll want forms and an amended 1040 from us?

Seems we'll have the same issue this year and her CPA made a comment about making sure we report the 1099-MISC on our personal taxes and "zero it out" so that we aren't taxed twice. Too late for 2015 - gotta fix it.

Also - 100% of the amount on the 1099-MISC went straight to the S-corp. She is the only shareholder and employee and received wages from the S-corp. The appropriate W2 and schedule K-1 were filed with our personal taxes.