New York, NY asked in Tax Law and Business Law for New York

Q: Possible for a single person S-Corp to be paid via 1099 and file schedule c ?

What about for NY State? Any issue being paid via 1099 not on payroll for single person small scorp?

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1 Lawyer Answer
John Kiritsis
John Kiritsis
  • Tax Law Lawyer
  • Brooklyn, NY
  • Licensed in New York

A: In short, the answer is probably yes. It would likely go through the IRS (especially if paper filed). However, at some point it would likely trigger an error/rejection type of message and/or an outright audit. S Corps file Form 1120S, which issues form K-1S. One of the great advantages of an S Corp, is the ability to cut down on self employment and/or payroll type of taxes. Here, the issuance of the 1099 undermines one of biggest favorable tax traits of an S Corp tax election. One of the main reasons single shareholder S Corp owners choose the S Corp route, is to avoid dealing with Schedule C. You may have to file a Schedule C at the end of the day, but it is generally something an S Corp owner may want to stay clear off. Hope this helps.

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