S Corp 1120S Pricing

[Sarah Huang]

Dear tax experts,

Would you be able to share with me the pricing for filing 1120-S return?

What documents are required to file the first 1120-S, please?  

My new client is the only member and owner in this S Corp and received 1099-NEC. 

Thank you in advance for any input! 

[qbteachmt · Accepted solution]

"is the only member and owner in this S Corp and received 1099-NEC."

Have you never done an S Corp? Make sure you understand the scope. You already have a problem.

1099-NEC should not typically be issued to an S Corp (except for medical services, as an example of one exception). Your taxpayer would fill in a W9 on behalf of the corporation as exempt.

The S Corp is the entity that contracted with the customer. Not your taxpayer. The customer pays the corporation. Not your taxpayer. Your taxpayer is supposed to be on payroll and get Reasonable Compensation for services performed on behalf of the corporation.

You have a shareholder-employee, in other words. S Corps don't have owners or members. There are specific limitations and rules for that shareholder-employee, as well.

[Strongsilence-CPA]

sarah

you might wish to retain the services of a cpa near you or one of the experts who post here.  

S Corps are complicated and QBteach has already identified an issue.

Good Luck!

[Sarah Huang]

WOW! Thank you so much for both QBteach and Strongsilence input!

Yes, I agree this is too complicated. I thought I would like to learn from this new S Corp client by filing 1120 S return. This is her new company that started in Sep 2024. She didn't have any W9, but 1099 NEC. 

Are there any resource I can learn from? Or maybe it's not worthy to take this one at this time?

[Strongsilence-CPA]

Learning, at least for me, is difficult during tax season.  I think you should start with the 1120S instructions. Or the Spidell guide here:  https://www.caltax.com/shop/publications/books-and-other-publications/life-cycle-of-a-corporation/

I like to learn from actual teachers but to each his own.

Consider this if you want more time:  File an extension for the S corp, estimate the income that will flow to the 1040, then file an extension for the 1040. 

[Sarah Huang]

Thank you very much Strongsilence for the valuable advice and resource! I like learn from actual teacher as well. I have to turn this client down. But I have learn very value lesson from this - not to take S Corp client for now.

Have a wonderful tax season tax experts!

[qbteachmt]

@Sarah Huang 

"She didn't have any W9, but 1099 NEC."

Your client would have submitted a W9 to their client, for them to get a 1099-NEC. Let’s review:

An employer asks an employee to fill in a W2 for purposes of tax name, entity id, status, and withholding. At the end of the year, the employee is issued a W4. This also is sent to the IRS.

A customer asks a consultant or independent contractor for the same info, it uses a W9. At the end of the year, the contractor is issues a 1099-NEC if the total of payments from a customer are $600 or more. This also is sent to the IRS.

For example, if you are doing business returns and are not working under a corporation, your business clients would ask for a W9 from you and you will get a 1099-NEC from them if you charge them $600 or more for that year. Maybe you run payroll every month for a business, so this is what you would be doing.

And as a tax preparer, you have a due diligence to confirm if your taxpayer business clients (even Sched C filers) have met their reporting requirement to issue 1099-NEC, MISC, etc, to their subcontractors. For example, property managers providing income to the property owner/landlords also should issue a 1099-Misc for Rent paid. There are penalties for not issuing 1099s:

https://www.irs.gov/payments/information-return-penalties

You might want to look for Continuing Education topics. I used to teach a Year End Prep class for business people, and that type of class would be useful for a tax preparer, as well.

[Sarah Huang]

Good morning experts!

Thank you qbteachmt for the detail information! It's really good to know you teach business class. My goal is do bookkeeping as well eventually. I want to focus on the tax season now. 

My client wants me to file S Corp extension and I will. Then she will find somebody else to fix the mess. Due to she doesn't understand English well, I cannot referral her to our community here unfortunately. 

By the way, does the S Corp need to file multi State extension? The S Corp was registered in New York in Sep 2024 but the job had done in AZ state. And she moved to AZ state since Aug 2024. The address on the 1099 NEC used her AZ address, but used S Corp' name and EIN. 

Thank you in advance!

[Sarah Huang]

The research showing 

Does Arizona accept federal extension S Corp?

Arizona doesn't require businesses (C-Corporations, S-Corporations, partnerships, and fiduciaries) to file a separate Business tax extension form if they have an approved federal extension from filing Form 7004.

New York does not recognize a federal extension. If you cannot meet the filing deadline for a NY business return, you should request a six-month extension of time by filing Form CT-5, Request for Six-Month Extension to File (For Franchise/Business Taxes, MTA Surcharge, or Both), on or before the due date of the return. Dec 5, 2024

[Strongsilence-CPA]

Good research. I agree that AZ doesn't require a separate extension.  BUT and IF the S Corp owes AZ tax then an extension will be required.