Converting 1099-NEC income to S Corp business income on tax return

What if some clients still send 1099s to me personally even though I have an S corp? Does that income have to be reported on my personal return, or can I still run it through the S corp somehow?

If clients incorrectly issue 1099s to you personally instead of to your S corp, you should first try to have them corrected. If that's not possible, you generally need to report that income on Schedule C of your personal return, then contribute it to your S corp as capital or pay it to the S corp as a management fee. This creates an extra step and can complicate your tax situation. The cleaner approach is to make sure all clients are issuing 1099s correctly to your S corporation going forward. This usually just requires providing them with your company name, address, and EIN on a W-9 form before they pay you.

Does it help with figuring out reasonable compensation too? That's always been the trickiest part of my S corp taxes - determining what's a reasonable salary vs. distributions.

Does it work if you have mixed income sources? I have some W-2 income plus my S corp that gets both 1099-NEC and direct payments without 1099s.

It absolutely helps with reasonable compensation analysis! It examines your industry standards and business financials to suggest appropriate salary ranges that would likely pass IRS scrutiny while maximizing your tax savings. It handles mixed income sources perfectly. You can upload W-2s, 1099s of all types, and even bank statements for those direct payments without 1099s. It categorizes everything and helps ensure you're reporting all income properly while maximizing legitimate deductions.

How exactly does this service work? I thought it was impossible to get through to the IRS without waiting for hours. Do they actually have some special connection to get you priority in the queue?

This sounds like a scam. There's no way to skip the IRS phone queue - everyone has to wait like everyone else. I bet they just put you on hold themselves and then charge you for the privilege.

The service works by using technology to navigate the IRS phone system and wait in the queue for you. It's not about having special connections or priority access - they simply take the waiting burden off your hands. When an agent is about to be connected, you get a call so you can speak directly with the IRS representative. They don't put you on hold themselves - their system actually navigates the complicated IRS phone tree and waits in the queue so you don't have to. It's basically like having someone else do the waiting for you, then they call you when it's actually your turn to speak with an agent.

What about home office deduction? I work from home for my S corp. Can the S corp reimburse me for that, or do I take that deduction personally?

For a home office, the best approach is usually to have the S corporation reimburse you through an "accountable plan" for the business use of your home. The corporation can deduct this as a business expense, and the reimbursement isn't taxable income to you when done correctly. You'll need to document the square footage used exclusively for business, calculate the percentage of your home it represents, and apply that percentage to relevant expenses (utilities, insurance, etc.). Keep detailed records of these calculations and expenses.

I use QuickBooks for my S corp and just record 1099-NEC income as regular service revenue. QB doesn't really care about the source document (whether it's a 1099 or not) - it's all just income to the business. I do create a specific income account called "1099 Contract Services" just to track it separately, but that's optional.

This is such an important point that many new S corp owners miss! I learned this the hard way in my first year. The IRS considers it tax avoidance if you're not paying yourself reasonable wages for the work you're doing. I had to go back and correct my payroll after getting a notice. Now I make sure to run payroll at least quarterly, even if it's just the minimum reasonable salary for my industry. It's worth consulting with a payroll service or accountant to get the W-2 wages set up correctly from the start.

This is really helpful advice! I'm in a similar situation where I recently formed an S corp and am still figuring out all the compliance requirements. The reasonable compensation requirement is something I've been worried about - how do you determine what's "reasonable" for your industry? Is there a specific percentage of business income that should go to W-2 wages, or is it more about matching what similar roles would pay in the market?