An S corporation is a business taxed under Subchapter S that can receive a 1099, but ordinary service payments to a corporation generally do not require Form 1099-NEC. The company must still report all business income, whether or not a 1099 was issued.
For payments made after December 31, 2025, the reporting threshold for many Form 1099-NEC and Form 1099-MISC payments is generally $2,000. The payment type and applicable exceptions still matter.
An S corporation reports its business income on Form 1120-S. The income generally passes through to shareholders on Schedule K-1, rather than being reported on the shareholder's personal return as 1099 income.
When Does an S Corporation Receive a 1099?
An S corporation can receive a 1099 in several situations, including payments processed by a payment platform and payments for services that have special reporting rules.
| Situation | Can the S corporation receive a 1099? | What it means |
|---|---|---|
| A client pays the S corporation by check or ACH for ordinary services | Yes, but Form 1099-NEC is usually not required | Report the revenue on Form 1120-S |
| Customers pay by credit card or through a payment platform | Yes, usually Form 1099-K | Compare the gross amount with the company's accounting records |
| The S corporation provides legal services | Yes | Legal fees paid to corporations are generally reportable |
| The S corporation provides medical or health care services | Yes | Payments to corporate medical providers can be reportable on Form 1099-MISC |
| A payer issues a form by mistake | Yes | Request a correction, but do not leave the income out of the company's records |
The IRS generally excludes payments to corporations, including an LLC taxed as an S corporation, from Form 1099-NEC reporting. Exceptions include legal services, certain payments from federal agencies and other transactions covered by the reporting rules.
Does an S Corporation Report Income If It Does Not Receive a 1099?
Yes. An S corporation must report its business income even when no 1099 was received.
A 1099 is an information form. It does not determine whether income is taxable. The S corporation should record its actual revenue in its books and report that revenue on Form 1120-S. A missing 1099 does not remove the reporting requirement.
Example
ABC Design, Inc. is taxed as an S corporation. During the year, ABC receives $50,000 from clients:
- $35,000 by check
- $15,000 through a payment processor
- No client sends ABC a 1099-NEC
ABC still reports the full $50,000 as business revenue on Form 1120-S. If the payment processor issues Form 1099-K, ABC should compare the form with its books and avoid recording the same revenue twice.
Why Might an S Corporation Receive Form 1099-K?
An S corporation may receive Form 1099-K when customers pay through credit cards, debit cards, payment apps or online marketplaces. The payment processor or platform, rather than the customer, usually issues the form.
Form 1099-K reports gross payments. The amount may not reflect processing fees, refunds, discounts or other adjustments.
If the company's name and tax identification number appear on Form 1099-K, the payment usually belongs in the corporation's business records. If the form lists the wrong taxpayer, ask the payment processor to correct it.
Does an S Corporation Issue 1099s to Contractors?
Sometimes. The S corporation's tax status does not remove its responsibility to issue required 1099 forms.
An S corporation generally does not issue Form 1099-NEC for ordinary business services paid to another corporation, including an LLC taxed as a C corporation or S corporation. The S corporation may need to issue Form 1099-NEC when it pays a noncorporate contractor for business services and the reporting requirements are met.
Examples include:
- Payments to an individual contractor operating as a sole proprietor
- Payments to some partnerships
- Legal fees paid to an attorney or law firm
- Certain medical or health care payments
- Other payments covered by Form 1099-MISC or Form 1099-NEC
For payments made after December 31, 2025, IRS guidance states that the reporting threshold for Form 1099-NEC and Form 1099-MISC is generally $2,000 or more. The payment type and exceptions can change the result.
Is a 1099 Issued to the S Corporation or Its Owner?
The 1099 should generally identify the entity that earned the income.
If the S corporation performed the work, the company should give the client its legal name and EIN on Form W-9. The payer should not normally report the company's service income under the shareholder's personal name and Social Security number.
The owner also generally should not receive Form 1099-NEC for services performed as an employee of the S corporation. Compensation for those services is usually paid through payroll and reported on Form W-2.
What Should You Do If Your S Corporation Receives a 1099?
- Check the recipient name and EIN.
- Compare the amount with the company's accounting records.
- Report the related income on Form 1120-S, whether or not the amount matches a 1099.
- Do not record the same revenue twice if the company received both a 1099-NEC and a 1099-K for overlapping payments.
- Ask the payer or payment processor for a corrected form if the name, EIN or amount is wrong.
- Give the form to the company's tax preparer if the discrepancy cannot be resolved.
Bottom Line
Record the S corporation's full business revenue, reconcile every 1099 with the company's books and request corrections for inaccurate forms. The presence or absence of a 1099 does not determine whether the income belongs on Form 1120-S.