I went through this exact same confusion when I started my S Corp two years ago! Your accountant is absolutely correct - S Corps do need to issue 1099-NECs to qualifying service providers, but the key word is "qualifying." Here's what helped me sort through the maze: Start by understanding that you DON'T need to issue 1099s to corporations, LLCs taxed as corporations, or for payments made via credit card/third-party processors. This eliminates a lot of vendors right off the bat. For your entertainment industry expenses like hair/makeup, these can absolutely be legitimate business deductions if they're specifically for performances, auditions, or professional appearances. Just make sure you can document the business purpose - I keep notes linking each service to specific gigs or professional events. The W-9 collection process gets easier once you establish it as standard practice. I now require W-9s before making any payments over $100 to new vendors. Most professionals understand this is normal business procedure, though some personal service providers might need a gentle explanation about why you need their tax info. Don't feel bad about not knowing this initially - the entertainment industry is notorious for informal payment practices, but as an S Corp you need to follow corporate tax rules. It's a learning curve but you'll get the hang of it!

I'm just starting my S Corp journey too and this thread has been incredibly helpful! I was literally panicking yesterday when my accountant handed me a similar list of vendors who need 1099s. One thing I'm still confused about - if I paid someone like $400 in cash for makeup services throughout the year but then also Venmo'd them $300 for additional work, does that $700 total mean they need a 1099? Or since the Venmo portion might be handled by the payment processor, do I only count the cash payments toward the $600 threshold? Also, for those of you who've been through this process - how far back do you typically keep records of these vendor payments? I'm trying to organize everything for this year but also wondering if I should be worried about prior years before I had the S Corp set up. Thanks for sharing all your experiences - it's making this whole learning curve feel way less intimidating!

I think the key issue here is that you need complete transparency and documentation of how these tax distributions are calculated. While it's true that your partner may legitimately owe more taxes due to being in a higher bracket, the current setup sounds problematic from an accountability standpoint. Here's what I'd recommend: First, request detailed calculations showing exactly how much of each person's total tax liability is attributable to the LLC income versus other sources. Second, establish a formal policy for tax distributions in writing - many partnerships use a formula where distributions are made based on each member's estimated tax rate multiplied by their share of business income. Most importantly, consider changing your process so that tax distributions go to each partner individually, and then you each pay your own taxes. Having one person write checks directly from the business account to cover their personal tax obligations creates unnecessary confusion and potential for disputes. You should also verify that you're both getting the same K-1 amounts - if you're truly 50/50 partners, your Schedule K-1 forms should show identical income allocations. If they don't, that's a red flag that needs immediate attention. The fact that your friends and family think something's off suggests your instincts are right to question this arrangement, even if the underlying tax principles are legitimate.

Your situation highlights a really common issue with LLC partnerships - the tax implications can be vastly different for each partner even when profits are split equally. What you're describing could very well be legitimate, but the lack of transparency is the real problem here. From what you've shared, your partner's higher tax withdrawals could be justified if she's in a significantly higher tax bracket due to her $125k day job income. When LLC profits "pass through" to your personal returns, someone earning $125k + LLC profits might pay 32% federal tax on that business income, while someone earning $32k + LLC profits might only pay 12-22%. Add in the 15.3% self-employment tax that you both pay, and the difference becomes substantial. However, you absolutely have the right to understand exactly how these calculations work. I'd recommend: 1. Ask to see both of your Schedule K-1 forms side by side - they should show identical income allocations if you're truly 50/50 partners 2. Request a breakdown showing how much of each person's total tax bill is specifically attributable to the LLC income 3. Consider amending your operating agreement to include a formal tax distribution policy with clear calculation methods 4. Change your process so tax distributions go to each partner individually rather than having one person pay taxes directly from the business account The meeting with her accountant is a great idea, but go in prepared with specific questions about the calculations. If everything is legitimate, there should be complete transparency about how the numbers work.

I can definitely relate to your panic about this situation! I had something very similar happen with BetMGM last year - got a W2-G for around $85,000 from a lucky streak on blackjack, but when I looked at my actual year-end numbers, I was down about $12,000 overall. The most important thing to understand is that you're NOT stuck paying taxes on $68,000 you didn't actually win. The W2-G is just a reporting mechanism for individual winning sessions, not your net gambling result. Here's exactly what you need to do: 1. **Get your complete DraftKings annual statement immediately** - Log into your account and look for "Tax Documents" or "Win/Loss Statement." This will show your true net position for the entire year, which sounds like it will be a loss. 2. **Report the W2-G income on Schedule 1, Line 8b** - Yes, you have to report the full $68,000 as gambling winnings. 3. **Claim your losses on Schedule A** - You can deduct gambling losses up to the amount of your winnings. If you lost money overall for the year, this should offset most or all of the reported income. 4. **Run the numbers on itemizing vs. standard deduction** - You can only claim gambling losses if you itemize, so calculate which option gives you a lower tax bill. The key is documentation. Keep everything from DraftKings and don't worry about having "ruined yourself financially" - the tax system does account for gambling losses when you follow the proper procedures. You've got this!

I completely understand your panic about this situation - I work as a tax preparer and see this exact scenario with online gambling platforms multiple times every tax season. The good news is you're absolutely NOT stuck paying taxes on $68,000 you didn't actually win. The W2-G is misleading because it only reports individual winning transactions over the threshold ($1,200+ for slots), not your actual net gambling results. Since you mentioned being down money overall with DraftKings for the year, you should be able to offset that reported income with your documented losses. Here's your action plan: **Immediate steps:** - Request your complete annual win/loss statement from DraftKings showing ALL activity for the tax year - This will likely show you had a net loss, which is what actually matters for taxes **Filing process:** - Report the full $68,000 on Schedule 1, Line 8b as required - Deduct your gambling losses on Schedule A (up to the amount of winnings) - Compare itemizing vs. standard deduction to see which saves more money **Key point:** You can only claim gambling losses if you itemize deductions, but with $68,000 in reported winnings to offset, itemizing will almost certainly save you thousands even if you lose other deductions. Keep all your DraftKings documentation - their annual statements are comprehensive and IRS-acceptable. You haven't financially ruined yourself; you just need to navigate the somewhat counterintuitive way gambling taxes work. The system does protect people in your exact situation when you follow the proper procedures.

Has anyone here dealt with converting a farm property from an LLC back to individual ownership before a parent's passing? We did this with my grandfather's farm last year to ensure we got the stepped-up basis, but now I'm worried about potential gift tax implications since the LLC was originally in our names (the kids).

The missing LLC documentation is a red flag that needs immediate attention, especially with BOI reporting deadlines approaching. I'd recommend starting with your state's Secretary of State office - they should have the Articles of Organization on file that will show who signed as the organizer and initial members. For the stepped-up basis question, the key factor is who actually owns the LLC membership interests at the time of your father's death. If he retained ownership (making it a single-member LLC), the property gets stepped-up basis. If you kids already own the LLC, no step-up occurs since you technically already own the property. Given the Medicaid planning aspect, I suspect the LLC ownership was likely transferred to you children to protect the asset, which would unfortunately eliminate the stepped-up basis benefit. However, if your father retained even a small percentage of ownership, that portion would qualify for step-up. You might want to consider having the LLC dissolve and distribute the property back to your father if he's still healthy and the goal is to maximize the stepped-up basis for your family. Just be mindful of the Medicaid lookback period implications that others have mentioned.

Don't stress too much! I work with a lot of freelancers and this happens more than you'd think. Here's what I tell them: always report your REAL income, not what's on an incorrect form. The IRS computers mainly flag when reported income is LOWER than what's on forms. When you report MORE, it rarely triggers issues. Think about it - the IRS is happy when you pay taxes on more income! Keep solid records, but don't lose sleep over this. The startup's mistake shouldn't become your problem.

I went through this exact same situation two years ago with a small marketing agency that basically disappeared after sending me an incorrect 1099. Here's what I learned: First, you're absolutely right to report the actual amount you received - that's what the IRS expects. I reported the correct (higher) income on my Schedule C and kept detailed records of all my payments, invoices, and attempts to contact the company. The key thing that gave me peace of mind was creating a simple one-page summary document that I kept with my tax records. It listed: - The incorrect 1099 amount vs. actual income received - Dates and methods of all my attempts to get it corrected - A brief explanation that the company became unresponsive I never needed to submit this with my return, but having it organized made me feel much more confident about my filing. The IRS never questioned anything because I reported MORE income than what was on their forms. Your bank deposits and invoices are solid evidence - you're in good shape. Don't let their poor record-keeping create stress for you when you're doing everything correctly!