If you're a small business owner or independent contractor, you've probably asked: Do S Corps get 1099s? The answer isn’t always straightforward. With tax season fast approaching, it’s critical to know who must issue a 1099 form, who receives it, and under what IRS guidelines.
Whether you're working with an S corporation, LLC, or sole proprietor, understanding how Form 1099-NEC, Form 1099-MISC, and S corp filing rules interact can help you avoid IRS penalties and streamline your tax compliance.
An S Corporation is a tax designation granted by the IRS. It allows a corporation or LLC to avoid double taxation by passing corporate income, losses, deductions, and credits through to shareholders.
Key features of an S Corp include:
Form 1099 is used to report various types of non-employment income. There are several types, but the most relevant for businesses are:
You must send a 1099 form if:
Generally, no, S corporations do not receive Form 1099-NEC or 1099-MISC for services provided.
The IRS explicitly states that payments to corporations (including S corporations) do not require a 1099—with a few exceptions (which we’ll explore next). This rule is based on the assumption that corporations, including S corps, are sophisticated entities capable of managing their own tax obligations.
However, if the S corp provides specific services such as legal or medical services, the IRS requires a 1099 form to be issued regardless of entity type. The IRS assumes S Corps already comply with federal income taxes and do not require income to be doubled-reported through 1099 forms.
Under IRS guidelines:
“You are not required to report payments to corporations, including S corporations and C corporations, on Form 1099-NEC.”
That means if you're paying an S corp for general consulting, marketing, or web design services, and it doesn't fall under an exception, you don’t need to send a 1099.
This exemption exists because S Corps, unlike sole proprietors or LLCs taxed as disregarded entities, are considered complex enough to manage their taxes due independently.
This reduces paperwork for both the issuer and recipient while streamlining IRS compliance.
The easiest way to confirm a vendor's business structure is through IRS Form W-9. This form will indicate the payee's federal tax classification.
On Form W-9, look for the checkbox:
☑ S Corporation
If it's marked, you typically don’t need to issue a 1099—unless the payment falls under an exception category.
Form W-9 is the backbone of your decision-making process. Here’s how to use it effectively:
This form protects your business in case of an audit and helps you determine whether a 1099 form is necessary.
To stay compliant with the IRS:
Failing to issue a required 1099 form can result in:
It’s better to err on the side of issuing a 1099 than to skip it and face IRS consequences.
No, unless the payments are for legal services, medical services, or other exceptions, you do not need to send a 1099-NEC to an S Corp.
You must refer to how the LLC is taxed. An LLC may elect to be taxed as an S Corp, C Corp, or sole proprietor. Check their W-9 to confirm.
Yes, for specific types of payments such as legal fees, medical services, and substitute payments.
No penalty. The IRS won’t penalize you for sending a 1099 you didn’t technically have to send. However, the S Corp may question the extra paperwork.
Yes. The IRS uses cross-referencing systems to match payments with reported income. If there’s a mismatch, you or the vendor could face an audit.
In most cases, S corporations are exempt from receiving 1099-NEC forms. However, there are key exceptions, particularly when it comes to legal and medical payments. As a business owner, your best strategy is to collect a W-9, review tax classifications, and use accounting software to track vendor payments.
When in doubt, issuing a 1099 form is usually better than skipping it—especially when you consider the potential IRS penalties. Understanding these rules will help you stay compliant, avoid audits, and save money come tax season.
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