scorp income

[nancyb1209]

My client transitioned from a sole proprietor schedule C to an LLC (new name, new tax id and filing as an S-Corp.)  The bulk of his income is 1099 made out to the LLC.  However he received some w-2's made out to him personally with his ss#.   Can you confirm the w-2's go on his 1040 and not on the S-Corp?

Thank you

[Just-Lisa-Now-]

If he was an employee and was issued W2s, they go on his own personal 1040 tax return.

[qbteachmt]

Let's take these one at a time:

"The bulk of his income is 1099 made out to the LLC."

He needs to issue a W9 to these companies, or a corporate letter, explaining the new FEIN and the new corporation. He also should have done this with, for example, Bank accounts, filing as an Employer, and insurance.

"However he received some w-2's made out to him personally with his ss#."

Then he is an employee of these companies. He also is supposed to be an employee of his S Corp, and supposed to have gotten a W-2 from that firm.

"Can you confirm the w-2's go on his 1040 and not on the S-Corp?"

W-2 = Employee relationship.

S Corps are not employees; they are the Employer of a person that works for them.

[BobKamman]

What was he doing when he was filing Schedule C?  Was he working for some companies that considered him an independent contractor, and others that told him sorry, but he's still an employee?  Then the companies that issued him a 1099 for non-employee compensation should now issue the 1099 to his LLC/S Corp (if any 1099 is required) and the companies that consider him an employee should continue issuing him a W-2.

Your job, if you choose to accept it, is to separate the expenses attributable to the S-Corp income (which are deductible on the 1120-S) from the expenses attributable to the employment income (which were flushed away by the 2017 tax legislation).