My husband started an SCorp in '18 & needs to file Form 1120. He worked for 3 different co.'s in 2018, but all 3 sent his co. a 1099. How should this income be handled?

[princess1231]

My husband started an SCorp on 8/23/18. This requires him to now file a Form 1120.  I understand that S Corps should not receive a 1099-MISC. He worked for 3 companies during calendar year 2018.  Each sent him a 1099-MISC.  How does that get handled?  For the work he did prior to 8/23/18, does that income go on our personal tax return?  Does only work performed after 8/23/18 go on the Form 1120?

[DDollar · Accepted solution]

There is no problem with an S-Corp receiving a Form 1099-MISC.  Vendors are not required to send Forms 1099-MISC to corporations (S or C) but there is no problem if they do.  The revenue your husband's S-Corp received should be included on Form 1120-S, whether reported on a 1099-MISC or not.

Any income your husband earned prior to forming the S-Corp should be reported on a Schedule C as part of your personal return.  Any applicable expenses for that period should also be included on Schedule C.  Only income received and expenses incurred on or after 8/23 should be reported on the 1120-S.

[Carl]

Also, the 1120-S is due by March 15th. After that date, the late filing penalty is $200 per month, per owner/shareholder. So don't be late. Doing things wrong that first year for a corporation can be quite costly on the tax front, and can easily bankrupt your business before it even has a chance to get off the ground. So perfection that first year with the 1120-S is not an option.... it's a must.