I get paid on 1099. But I also have an LLC registered in FL. Can I run the money I get monthly via LLC, as the LLC revenues? How do I file my taxes when I get 1099?

[Vanessa A]

What is the 1099 for and what type of 1099 is it?

If the LLC is the reason you are getting the 1099, then yes, you would include this income on your LLC return.  If you are a single member LLC and did not choose to be treated as an S-Corp, this would be entered on your Schedule C.  You can do this using TurboTax Home and Business or TurboTax Premium.

If this income has nothing to do with the LLC type of work, then no, you would not include it with the LLC income.  You would file a separate Schedule C that included the 1099 income for services performed.  

If this is a 1099 that is for retirement, or something other than business related, you would not include it on Schedule C, instead you would enter it under the appropriate category in TurboTax.  For example, if is it a SSA-1099, you would enter SSA-1099 in the search box then click JumpTo and enter it as retirement social security. 

[yn-mailbox]

Thank you so much for replying! I was hired as an independent contract and will eventually get 1099, not sure what kind. 
I also opened an LLC to use its tax advantages. The client does not care about my LLC and only works with me as an independent contractor, hence I expect a 1099 next year. 

So, my question was if I can still treat these revenues I am getting as an independent contractor monthly as my LLC revenues for tax purposes?

[KrisD15]

A Limited Liability Company is not a tax entity, what tax form do you file for the LLC? 

If you file Schedule C for the LLC, yes, you can merge and report as one if the business is of the same type, (consulting, painting, design....) as long as you are also a resident of Florida.   

[yn-mailbox]

I believe there has to be some business taxes paid to the state. Also sale taxes. But I could be totally wrong.

Basically my question boils down to this:
Can I "subcontract"  all the work - for which I am getting the 1099 - to my S-corp/LLC and pay the taxes as S-corp (Schedule C, I believe)?  This way my taxable income from 1099 becomes zero because my expenses (what I paid to my S-corp for the work done) are equal to what I received on 1099. Zero income -> zero tax.

Is this legal? Any red flags?  I am just trying to save on the Social Security tax: my W-2 salary from my S-corp will be less than what I am getting on 1099. 
Thank you!

[Opus 17]

---

@yn-mailbox wrote:

Is this legal? Any red flags?  I am just trying to save on the Social Security tax: my W-2 salary from my S-corp will be less than what I am getting on 1099. 
Thank you!

---

That is your red flag.  If you formed an LLC and elected to be taxed as an S-corp (a critical fact you did not disclose up front) then you must pay yourself a fair market rate salary for the work you do.  If your customer thinks your work is worth $10,000 per month, and you only pay yourself $5000 per month, that is your red flag.  If you are audited, the IRS is going to want an explanation.  (And I assume you don't have much in the way of expenses, because if you had $5000 of deductible expenses, so your net profit was $5000 per month, your SS and medicare tax would be the same either way.)

Don't monkey around.  If you want your customer to hire your S-corp, give them the S-corp name and tax ID number.  If your income is reported on a 1099, you can directly report it as revenue on your form 1120-S return, you do not have to "pass it through" a schedule C disregarded entity on your tax return first.  

But don't play games.

And you may want professional tax assistance on this subject. 

[yn-mailbox]

Thank you for your response. But I don't see what I am trying to do as monkeying around.
1. Customer wants to pay via 1099. I have no choice.

2. Reasonable salary per IRS guidelines  - yes, this is well understood, nobody is going to work around it
3. Every s-corp I know about gets more from the customers than they are paying in salaries. So, how it is defrauding or working the system?
I just opened my LLC after I signed with the customer. In fact, it's still in the process of being created. And I cannot dictate the customer how I am paid. 
So, I don't see any red flags there.  From your response, it seems to be perfectly legal to subcontract the work to my own S-corp. Customer pays for the work done. He does not care about the workforce income levels.
As I understand, this is how home contractors operate when they given those 1099 for the job over $600. 
And if I get audited, so be it. I will keep my records in order anyway

[Opus 17]

The customer is not required to issue a 1099-NEC if you are taxed as an S-corp.  You would document that by giving them a form W-9.  If they insist on issuing a 1099-NEC, try to make sure they use the corporations's tax number.  The income would then be reported as company income on your 1120-S.  There is no need to "pass it through" a sole proprietorship in your name on schedule C. 

[yn-mailbox]

Thanks!
But it's their policy to hire individuals and not companies. For whatever reason. I don't have a strong enough hand to convince them to change how they pay me. 

"There is no need to "pass it through" a sole proprietorship in your name on schedule C. "

Sorry, but I am not sure I understand the meaning of this phrase. 

[AmyC]

I don't think you understand the basics. An LLC is a legal entity that you set up. It is not a tax entity. Once you have an LLC, if you don't do anything else, you are disregarded. As a sole proprietor, it becomes a Sch C business as part of your tax return. If you have others in the LLC with you, it becomes a partnership and you file a 1065.

You mentioned S corp- to be an S corp, you have to send Form 2553 to the IRS electing to be treated as an S corp. See S corporations | Internal Revenue Service.   If you are an S-corp and have an  EIN, the company you worked for would not send a 1099.

Since you got a 1099, either the employer believes you are disregarded or you didn't give them the EIN of the S corp.

My guess is that you are a sch C, it is part of your tax return.

 Add the business to your return and put the income as part of the business.

See Tax information for businesses

[yn-mailbox]

"If you are an S-corp and have an  EIN, the company you worked for would not send a 1099."

It is their sole discretion. I was told: we don't do corp 2 corp. Only 1099 or W-2 with individuals. And for you it will be 1099.
I have no idea what their reasons are but this is what I was told outright. 

To be fair, I didn't have an S-corp or LLC formed yet when I signed the contract but I asked them if they would consider signing with an S-corp of my friend. And they said "no". 
So all this talk about what I should have asked them to do/ should have told them is  pointless. I am where I am

Thanks a lot for your help!

[RobertB4444]

If you receive a 1099-NEC made out to you personally then you should not enter it as income for an S-Corp.  It should be entered on your 1040 ac schedule C self-employment income.  That is where the IRS will expect to see it.

@yn-mailbox 

[yn-mailbox]

Thank you. I am still trying to get an answer to my question:

Can I subcontract all the work I am getting  1099 for to my S-corp?  Basically, move every payment I am getting monthly - and for which I will get the 1099 next year - to my S-corp business account. Then my 1099 profit - and therefore tax - will be zero. 
I don't need an advise to make my client pay to my S-corp or issue 1099 to my S-corp: this is not an option. They are using an intermediary who only deals with individuals. So, I will get a 1099 to my name. But I don't want to pay Social Security tax from the whole amount. I want to limit it to the salary I am paying to myself within my S-corp.

Seems like it should be a pretty common situation: home contractors get personal 1099 all the time when they do jobs worth > $600.
Thanks!

[ThomasM125 · Accepted solution]

No, that would not be advisable. Since you and the S Corporation are related parties, there is no reason to "subcontract" the work to the S Corporation except as a tax saving strategy. As such, it would likely be disallowed by the IRS should you get audited. You would need a business purpose for the arraignment.

Furthermore, you are required to pay yourself a reasonable salary from the S Corporation. From the standpoint of the IRS, than amount would be equal to your distributions from the S Corporation. Your only allowable justification for paying yourself a salary for less than what the company earned would be if you were retaining money in the business for a particular need of the business, such as expansion, purchasing a building down the road or some similar endeavor. You can't simply pay yourself less than the net income of the business to avoid self-employment taxes. 

[yn-mailbox]

First of all, thank you so much for actually answering my question in simple terms that I could understand.

As to the justification for paying me a salary that is less than the company intake, I believe the IRS definition of reasonable is the industry average, give or take.  I have quite a few friends w/S-corps and all of them get healthy K-2 profit distributions.  I mean as long as my salary is not artificially low and supports my cost of living, IRS should be OK with it, no?  
I read a little on what IRS considers a reasonable salary and it seems people often use 60/40 rule: 60% towards the salary and remaining 40% go to the profit distribution. 
Even if IRS finds my salary unreasonable, all I risk is having to pay back payroll taxes plus some penalty.
As long as I don't go to jail, I am OK with it.
Thank you again!