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1120s : Can the shareholder be paid via W-2 or 1099-Misc for management work?

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Level 1

Let say shareholder is also same person who manage the corporation, should he/she requires for W2?   can u pay 1099MISC to shareholder who is also same person who manage the business? so by end of the year, this person receive schedule K1 and 1099MISC?   would that possible or not?

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Employee
Employee

I would look to the proper classification as an employee v. independent contract.  Here is an IRS resource for making the determination: https://www.irs.gov/pub/irs-pdf/p1779.pdf

If the shareholder has a separate management company that manages the corporation, then a 1099-MISC would be issued.  1099-MISC would go to a legal entity or if a sole proprietorship then to the individual.

Thank you,

Mike D'Avolio

Intuit

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3 Replies 3
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Level 15

Not possible

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.
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Level 3

SCorp Owner / Managers are required to be paid a reasonable compensation, paid through W2 wages.  This does not preclude them from also receiving payments for contract work that is un-related to the  normal business operations (SCorp is a plumbing business, Owner also does IT support, owner provides IT support and to SCorp).  Related to 199A, both the W2 and 1099 work is a deduction to arrive at QBI and the 1099 work, it has been suggested, cannot be included in the indivduals QBI figures (IE deducted from his Schedule C QBI figure).

0 Cheers
Highlighted
Employee
Employee

I would look to the proper classification as an employee v. independent contract.  Here is an IRS resource for making the determination: https://www.irs.gov/pub/irs-pdf/p1779.pdf

If the shareholder has a separate management company that manages the corporation, then a 1099-MISC would be issued.  1099-MISC would go to a legal entity or if a sole proprietorship then to the individual.

Thank you,

Mike D'Avolio

Intuit

View solution in original post