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butchik
Returning Member

1 employee/owner S-corp SEP max contribution limit who gets 1099 from customer. How to determine net earnings since the S-corp income goes to personal income tax return.

Can i contribute 25% of total amount in 1099 (i.e. amount in 1099 is basis for "net earnings" or "compensation") or do i need to subtract business expenses from them?
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2 Replies

1 employee/owner S-corp SEP max contribution limit who gets 1099 from customer. How to determine net earnings since the S-corp income goes to personal income tax return.

dmertz
Level 15

1 employee/owner S-corp SEP max contribution limit who gets 1099 from customer. How to determine net earnings since the S-corp income goes to personal income tax return.

The S-corp shareholder's compensation is the amount reported on the shareholder's W-2 from the S corp.  It's what the S corp paid the shareholder in wages or salary.

 

S corp shareholders receive a W-2, not a Form 1099-NEC or 1099-MISC.  S-corp shareholders are employees of the S corp.  They are not self-employed.

 

If this is your first year having an S corp, you should get professional help.  Making mistakes with an S corp can be quite costly.

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