Tax Minute

1099-MISC INCOME (2)

Many taxpayers that were filing a Schedule C will file to become an S-corporation due to the tax savings available by using this structure. If you recently did this, make sure you verify the information on any 1099-MISC that you may receive. In many cases, the companies that you are doing work for will not update their systems and will issue a Form 1099-MISC in your name, not in your company's name. If this happens make sure you report as gross income the amount on the 1099-MISC with the same amount listed as an expense on your Schedule C. Even though this income may have been properly reported on your corporate tax return, the IRS will send you a notice indicating a balance due if you fail to report the gross income on your personal tax return. In addition, make sure you contact the payee so that they update their files and you will not have to file this phantom Schedule C year after year. You also need to be aware that the IRS may challenge the reporting of the income on a corporate return versus your Schedule C if you have entered into a contract with a vendor as an individual to provide services.

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