What Company To Contact To Issue 1099 For My S Corporation by February 28?

Question

For 1099s issued to yourself for your compensation of an S corp, one has until the end of February instead of the end of January. I saw an ad at BP for processing 1099s but missed who the vendor was. I also called a local payroll company called Paychex but they don't do 1099s. As I don't have employees I don't have to do payroll other than pay myself on a 1099 and of course, make quarterly estimated payments.

Can anyone recommend a company for this? I don't want to have to get the special three-colored forms and spend the good part of an afternoon or day trying to get it to print correctly in each of the boxes on all of the different copies.   If I thought I could handwrite it in, it would be done already.

Any thoughts on a company?

Steve Babiak · Answer

For somebody comfortable with tax position, you ask a question on 1099 that is more indicative of a novice rather than what you claim - so @Brandon Hall is probably offering sound advice. BTW, you should read up on the instructions for issuing 1099 firms in the IRS website. This year's  deadline was Feb 2 as mentioned in another post; normally that deadline is Jan 31, but that happened to fall on the weekend this year so extra time was allowed. The Feb 28 deadline is for reporting / filing the 1099 forms (that were issued) to the IRS along with form 1096.

So maybe you are already getting good tax advice, and knew all that already, but for some reason I have my doubts about that ...

Brandon Hall · Answer

@Burt L. May I ask why you are issuing yourself a 1099 via the s-corp you own?

Such a thing is dangerous and raises audit flags.

Mel Jeffrey · Answer

I am having issues with my @mentions this morning but Brandon Hall this was very well put I couldn't have said it any better.

Brandon Hall · Answer

@Bridget Smith-Osbourne

It is inappropriate to issue a 1099 to a shareholder (or owner) of a S Corporation for services rendered. Issuing a W-2 and withholding the necessary payroll taxes is the recommended treatment as per IRS guidance. Shareholders are issued a K-1 showing their portion of the income and expenses from the S-Corp.

If the S-Corp fails to compensate owners (employees) via a W-2, then the S-Corp is likely not withholding its share of employment taxes. The IRS could come along and hit the S-Corp with penalties and fees for failure to do so. Now, you as the receiver of the 1099 will pay SE taxes, so if you are also the owner of the S-Corp the whole situation is tax neutral, but the IRS will still come after the S-Corp for not following the law.

Issuing a 1099 to the owner of an S-Corp could also be border line fraud. A S-Corp is allowed to withdraw distributions on earnings that aren’t subject to self-employment and payroll taxes. If you are classifying yourself as a contractor rather than an employee, the earnings won’t be subject to payroll taxes and can be taken as a distribution allowing the S-Corp to avoid paying SE taxes. This is further perpetrated by underpaying yourself as a contractor. This of course is highly illegal.

An owner of a corporation is always considered an employee and therefore should not receive a 1099 for services rendered. Further, if you as the owner are drawing from the S-Corp in terms of distributions, you are required to be on payroll and issued a W-2. Adequate compensation for services rendered to a S-Corp is a hot-button issue with the IRS. This is my reasoning for questioning @Burt L.  because even though he says he’s comfortable with his tax situation, the IRS doesn’t allow this type of treatment, so I’m not sure where he is getting his advice from.

Burt L. · Answer

As already mentioned, I am comfortable with my tax position. Please keep the thread on the subject posted in the subject line and let go of using this thread to garner business with revenue ruling citations from the 1950s.  I will have the matter solved by the end of business Monday.

David D'Errico · Answer

@Brandon Hall

what about 1099 yourself for labor costs while doing a renovation on a property my LLC owns(50/50)......otherwise know as sweaty equity( can i capitalize on that)....but i want to pay myself while i am there working......drawing payments from the rehab loan......the labor has to get done by someone, so why not do it myself and pay myself......any thoughts?

thanks

Mel Jeffrey · Answer

Bridge Smith Osbourne I don't believe it is wise to file a 1099 if you have an S-Corp please consult with your attorney.  The rules of S-corp are very clear.

Bridget Smith-Osbourne · Answer

@ Brandon Hall. I know someone who has done exactly what Burt L. has done; issue themselves a 1099 misc from their S Corp. Would this be an issue of concern if they paid estimated quarterly self employment taxes? Really appreciated your feedback.

Burt L. · Answer

Thanks  - I appreciate an answer to the thread question. I looked at the process  at Track1099 and it looks simple. I knew there was little cost-benefit  in chasing down the specific forms and  doing printer set-up hijinks to save the $4 dollar fee. Just what was sought.

I will avoid the flavoring about any impropriety and certainly do appreciate the company name provided. The tax recommendation came from quite a high level and I just have to execute it.

What Company To Contact To Issue 1099 For My S Corporation by February 28?

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