Key Takeaways

  • S corporations generally do not receive 1099 forms, but there are important exceptions (such as payments to attorneys and medical providers).
  • The 1099-NEC form has replaced the 1099-MISC for reporting nonemployee compensation.
  • Payments made via credit card or third-party processors are reported using Form 1099-K, not a 1099-MISC or 1099-NEC.
  • Companies must issue 1099s to unincorporated vendors or independent contractors who earn more than $600 annually.
  • S corps must still issue 1099s for their own vendor payments if the recipients meet IRS requirements.
  • Failing to file 1099s on time can lead to significant penalties, depending on how late the filings occur.
  • Use Form W-9 to verify whether a vendor qualifies as a corporation and if a 1099 is required.

Do S corps get 1099 forms sent to them? In most cases, these forms do not need to be sent to corporations. This is the same for both C and S corporations. A 1099-MISC form is primarily used to report payments made to non-employees, like a contractor or service provider. 

1099-MISCs

1099-MISCs are the equivalent of a W-2 for independent contractors, the IRS uses these to track the taxes they should get from people who are self-employed. 1099-MISCs need to be sent to single-member LLCs, but not to one that has S or C corporation status. 

Below is a quick guide: 

  • Sole proprietor — 1099-MISC  
  • Private contractor or LLP/partnership — 1099-MISC  
  • LLC with S or C corporation status — No 1099-MISC

The business that made the payment to the independent contractor is the one who must report the payments to the IRS, and then send a copy to the provider. 

Understanding 1099-NEC vs. 1099-MISC

In 2020, the IRS reintroduced Form 1099-NEC (Nonemployee Compensation) to separate contractor payments from the broader 1099-MISC category. This form is used to report payments made to independent contractors or nonemployees, while the 1099-MISC is now reserved for other types of miscellaneous income, such as rent, prizes, or attorney fees.

For example, if an S corporation hires a freelance consultant and pays them more than $600, that payment should be reported on Form 1099-NEC, not 1099-MISC. However, if the contractor operates as an S corporation, a 1099 is typically not required, except under IRS exceptions such as legal or medical services.

Exceptions to the 1099 Rules

There are some exceptions to the general rules:

  • 1099-MISCs are issued for payment of attorney fees (even for corporations)
  • Any gross proceeds paid to an attorney (typically for claim settlements)
  • Any payments made to for-profit medical care providers 

1099-MISCs are applicable for services, not for merchandise or goods purchased. They are not required for services that are considered personal and unrelated to the business. 

Common Scenarios Where S Corps Still Receive 1099s

While most S corps are exempt from receiving 1099s, the IRS requires reporting in specific cases. Examples include:

  • Attorney fees: Payments to law firms or attorneys—regardless of their corporate status—require a 1099-NEC for services and 1099-MISC for gross proceeds.
  • Medical and healthcare payments: If your business pays more than $600 to a corporation that provides medical or healthcare services, you must issue a 1099-MISC.
  • Payments for fish purchases or federal executive agency services: Niche exceptions where corporate entities still receive 1099s apply under IRS rules.

These exceptions are designed to ensure transparency in professional service payments, even when made to incorporated entities.

The $600 Threshold Rule 

In most cases, companies only need to send 1099-MISCs to a contractor who has received more than $600 in payments for a calendar year. If a company pays with a credit card or uses a third party network, they would send a 1099-K, not the 1099-MISC. 

1099s you must send are as follows:

  • For debt over $600 that is owed to you by an S corporation —1099-C
  • S corporations who sell or abandon secure property to you — 1099-A
  • Barter exchanges you make with S corporations — 1099-B
  • Merchant card or third party network payments you make to S corporations that exceed $20,000 or 200 transactions — 1099-K  

How the 1099-K Rule Affects S Corps

If payments to an S corporation are made via credit card, PayPal, or other third-party processors, the payer does not issue a 1099-NEC or 1099-MISC. Instead, the payment processor must issue a Form 1099-K if transactions exceed $20,000 or 200 transactions per year (though thresholds are expected to lower in the coming years).

S corporations accepting card or online payments should ensure their records align with 1099-K data to avoid discrepancies during IRS reconciliation.

Completing the 1099 Form 

To file a 1099-MISC you will need information about the contractor first. This information comes from a W-9 that a contractor fills out prior to beginning work. 

Companies are required to send 1099-MISCs by January 31st of the following year. Be aware that some states have separate deadlines and filing requirements for 1099s. If you have any questions, speak with a tax advisor to confirm specific state requirements. 

How S Corps Should Handle 1099 Issuance

Even though S corps don’t typically receive 1099s, they must still issue them to vendors and independent contractors when appropriate. Here’s how:

  1. Collect Form W-9 from every vendor or contractor before making payments.
  2. Determine if the recipient is a corporation; if so, confirm whether an exception applies (like legal or healthcare services).
  3. File Form 1099-NEC for nonemployee compensation and Form 1099-MISC for other reportable payments.
  4. Submit forms to the IRS and recipients by January 31 (electronic or paper).

Maintaining accurate records and verifying EINs helps S corporations prevent costly filing errors.

Tips for 1099 Filings

Prep 1099 filings early as you may miss the deadline if you realize late in the year that you are missing payment or contractor information. You can personally file and deliver 1099s which requires you to prepare, print, deliver, and file everything. This option is advisable for those who issue only a few 1099s per year. 

For companies who manage thousands of contractors, look for a 1099-MISC filing service to assist with the process. The last option is to hire a professional tax advisor or CPA. 

Failing to file 1099s by the deadline can result in hefty fines. Penalties can range from $50 to $260 per instance, per form, with a maximum penalty of $3,193,000. 

Be cautious when determining whether to issue a 1099 if you are unsure if a company has S corporation status. If the company is not an S corp, then you will use the W-9 to finish the 1099-MISC. The W-9 can also be used to prepare a 1099-C, 1099-S, or 1099-K. 

Employees who are either part time or full time have earnings reported through the company's payroll department who is withholding federal, state, and local taxes every time the employee is paid. There is no need to do any other reporting for employees. 

Examples of non-employees who require a 1099:

  • Outside accountants
  • Commission-based salespeople
  • Freelancers
  • Independent contractors
  • Private janitorial services

IRS Penalties for Incorrect or Late 1099 Filings

The IRS enforces steep penalties for inaccurate or late 1099 filings. Penalties are assessed per form and depend on when corrections are made:

  • Filed within 30 days of the deadline: $60 per form
  • Filed by August 1: $120 per form
  • Filed after August 1 or not at all: $310 per form
  • Intentional disregard: $630 per form or more

For S corporations that issue a high volume of 1099s, using e-filing platforms or CPA support can help ensure compliance and reduce manual errors.

Change in 1099 Reporting for Corporations

As of 2012, both S and C corporations have to issue 1099s for all vendors, including other corporations. Previously these were only utilized for services from unincorporated businesses and individuals. Now, 1099s must be issued for products and to other corporations. 

For example, if a corporation hires a freelance writer to draft marketing copy for their new website, or they buy all new computer equipment from another corporation, these activities are reported on the 1099-MISC. Unfortunately, the new law adds more work for small businesses and S corporations who are required to keep more detailed records now. 

Best Practices to Stay Compliant with 1099 Rules

To stay compliant with 1099 reporting requirements, S corporations should establish clear internal policies for contractor management and recordkeeping. Recommended steps include:

  • Requesting W-9s early: Gather vendor information before issuing payments.
  • Maintaining a vendor database: Include contractor names, EINs, payment methods, and filing status.
  • Reviewing IRS updates annually: Regulations on thresholds and form types change frequently.
  • Using e-filing systems: Platforms like TaxBandits or the IRS FIRE system simplify submissions and reduce late-filing risks.

Being proactive helps S corps avoid unnecessary audits or penalties while ensuring they meet federal and state reporting obligations.

Frequently Asked Questions

  1. Do S corps get 1099s from clients?
    Generally, no. S corporations don’t receive 1099-NEC or 1099-MISC forms unless the payments fall under IRS exceptions, such as legal or medical services.
  2. Are S corps required to issue 1099s to others?
    Yes. If an S corp pays an unincorporated vendor or contractor $600 or more during the year, it must issue a 1099-NEC or 1099-MISC depending on the payment type.
  3. What is the difference between 1099-NEC and 1099-MISC?
    The 1099-NEC reports nonemployee compensation, while the 1099-MISC covers other income categories like rent or royalties.
  4. How does an S corp confirm whether a vendor needs a 1099?
    Use Form W-9 to collect taxpayer information and determine whether the vendor is incorporated or qualifies for 1099 exemptions.
  5. What happens if an S corp misses the 1099 filing deadline?
    The IRS can impose penalties of $60–$310 per form, depending on how late the filing occurs, and even higher fines for intentional disregard.

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