Turbotax Duplicating Income with 1099-NEC and K1

[lmlm18]

Hi,

I own and am the only member of a business that is taxed as an S-Corp. I received a 1099-NEC and filled out a 1120S with the information on the 1099-NEC and created also a K1 for myself.

When I start to input information on Turbotax Home and Business it is counting my income as double when I type in my s-corp business income (under business tab), and then typing the K1 info (under personal tab). 

Should I only type in my business income/expenses and not fill out the K1 under personal tab so income isn't counted twice?

For future years, how can I type in the correct info to turbotax if my 1099-NEC states for example $100k income but my K1 says the business had income of $60k and distribution to me (only owner/shareholder) of $40k? 

[ThomasM125]

You should only enter the K-1 form from the S corporation on your personal tax return, as is summarizes your income from the business. 

If you take a distribution from the business, you should treat that as wages and report it on a W-2 form. You should pay in FICA and Medicare taxes on it and also withhold federal and state income taxes. Since you are filing as a corporation, you are required to pay yourself a reasonable salary, just as would happen if you were an employee of another business. The wages would be deducted on the S corporation return. You would enter the wages and net income of the business on your personal tax return, as a K-1 and W-2 entry.

[lmlm18]

Ok, understood. But if last year (2022) my corporation had net income of $72k and that is what I am claiming as my wage on the K1 (I didn't give myself a W2), then should I just input that amount under the business tab when filing? 

Basically what I am trying to say is that for last year I am claiming every $ of profit as a wage, so I assume I need to file under the business tab so that business taxes, social security, medicare amounts are all paid? 

[RobertB4444]

Let's start with the S-Corporation return that you filed.  

A 1099-NEC is issued to a person or a company.  You need to double check the 1099-NEC that you received and make certain that it was issued not to you as an individual but to your company.  

If it was issued to you personally then you should take the 1099-NEC and enter it into the personal return as business income.  You'll pay self-employment tax on the taxable amount after any expenses are deducted.  In this case you should not file an S-Corporation return at all nor enter a K-1 onto your return.

If the 1099-NEC was issued to the company then you would create the S-Corporation return and that creates a K-1.  In that case you will enter the K-1 into your personal return but not enter anything into the business income section.  As a single member S-Corp you are required to pay yourself a reasonable salary which then has to have a W2 issued to you by your own company.  If you did not do that this year then you should definitely get to work on doing that for 2023.

Either way, you only enter business income one way or the other - either in the business income section or through the K-1.  Never both.

@lmlm18