An LLC taxed as an S Corporation generally does not get a 1099. Once your LLC files Form 2553 and elects S Corporation status, payers treat you as a corporation and skip the Form 1099-NEC for standard service payments. A handful of payment types override that exemption, and the rules only work if the payer has a correctly completed W-9 from you.
Why the S Corp Election Removes You From 1099 Reporting
The 1099 system exists so the IRS can track income from businesses that don’t file their own entity-level return. S Corporations already file one. Every S Corporation reports its income, deductions, and credits on Form 1120-S,1Internal Revenue Service. About Form 1120-S, U.S. Income Tax Return for an S Corporation and that income flows through to each shareholder on Schedule K-1 and onto their personal Form 1040.2Internal Revenue Service. 2025 Instructions for Form 1120-S A third-party 1099 would be redundant.
The LLC label on your state paperwork tells the IRS nothing about how you’re taxed. What matters is your federal tax classification. An LLC that has filed Form 2553 is treated as a corporation for reporting purposes,3Internal Revenue Service. About Form 2553, Election by a Small Business Corporation and that corporate treatment is what triggers the exemption.
A quick note on the boundary: if your LLC has not made an S or C Corporation election, you are not exempt. A single-member LLC defaults to sole proprietor treatment, and a multi-member LLC defaults to partnership treatment.4Internal Revenue Service. Limited Liability Company (LLC) In either default case, payers are required to send you a 1099-NEC when payments cross the reporting threshold, which rose to $2,000 for payments made after December 31, 2025 and will be adjusted for inflation starting in 2027.5Internal Revenue Service. Form 1099 NEC and Independent Contractors
How the Payer Knows You’re an S Corp: the W-9
Your exemption is only as good as the paperwork the payer has on file. Before paying a vendor, businesses collect IRS Form W-9. On that form, your LLC checks the “LLC” box and enters “S” in the tax classification field to indicate S Corporation status.6Internal Revenue Service. Form W-9 (Rev. March 2024) That single letter is the signal that tells the payer no 1099-NEC is needed.
Fill out the W-9 promptly and accurately. If you never return one, or the taxpayer identification number you provide doesn’t match IRS records, the payer is required to apply backup withholding at a flat 24% to every payment until the issue is resolved.7Internal Revenue Service. Backup Withholding That money goes straight to the IRS, and you only get it back when you file your return and claim it as a credit. A properly completed W-9 stops the withholding and clears the 1099 question at once.
Exceptions Where Your S Corp Will Get a 1099
The corporate exemption is broad but not absolute. The IRS requires 1099 reporting on a few specific payment types no matter what kind of entity receives the money.
Legal Fees
Attorneys’ fees paid in the course of business must be reported on Form 1099-NEC even when the law firm is an S Corporation or C Corporation.8Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC – Payments to Corporations for Legal Services If your S Corp LLC is a law practice, expect 1099-NECs from your business clients.
Gross proceeds paid to an attorney in connection with legal services, but not as compensation for the attorney’s own services (a settlement check routed through a claimant’s lawyer, for instance), go on Form 1099-MISC, Box 10 instead.9Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC – Gross Proceeds Paid to an Attorney The corporate exemption doesn’t cover either type of legal payment.
Medical and Health Care Payments
Payments of $600 or more for medical and health care services are reported on Form 1099-MISC, Box 6, even when the provider is incorporated. The rule covers physicians, hospitals, and any other health care provider, including professional corporations.10Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC – Medical and Health Care Payments An S Corp medical practice will receive these.
Fish Purchased for Resale
An unusual one, but real. Cash payments of $600 or more to someone in the business of catching fish, when the buyer purchases the fish for resale, get reported on Form 1099-MISC, Box 11, regardless of corporate status.11Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC – Fish Purchased for Resale
Card and Payment App Payments Don’t Generate a 1099-NEC
Payment method matters. When a customer pays you by credit card, debit card, or through a third-party payment network like PayPal or Venmo, that payer does not issue a 1099-NEC for the transaction. The payment processor handles it on Form 1099-K instead.12Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
For 2026, a payment processor must issue Form 1099-K only when a payee’s gross transactions exceed $20,000 and the total number of transactions exceeds 200.13Internal Revenue Service. Treasury, IRS Issue Proposed Regulations Reflecting Changes to the Threshold for Backup Withholding on Certain Payments Made Through Third Parties Even for an S Corp LLC, a large enough volume of card and app payments can produce a 1099-K, since the corporate exemption doesn’t apply to 1099-K reporting the way it does to 1099-NEC. Where a client pays you partly by check and partly by card, only the check portion is what the client would count toward any 1099-NEC obligation, and if you’re an S Corp that portion is exempt anyway.
Whether or Not You Get a 1099, You Owe the Tax
The 1099 threshold governs the payer’s paperwork, not your tax bill. Every dollar your S Corp LLC earns belongs on Form 1120-S and flows through to your K-1, whether a 1099 arrives in the mail or not. Keep your own income records; don’t rely on inbound 1099s to tell you what you made.
What to Do If a 1099 Shows Up Anyway
Payers sometimes issue a 1099-NEC to an S Corp by mistake, usually because they never collected a W-9 and defaulted to reporting. The 1099 doesn’t create an extra tax liability, since you were already reporting that income on your 1120-S, but it does create a records mismatch the IRS could flag later.
Contact the payer and ask them to file a corrected 1099 showing zero in the payment box. Send a completed W-9 with the “S” classification so the situation doesn’t repeat. If the payer won’t cooperate, you can call the IRS at 800-829-1040 for help.14Internal Revenue Service. What to Do When a W-2 or Form 1099 Is Missing or Incorrect Meanwhile, report your income accurately on the 1120-S. The erroneous 1099 doesn’t change what you owe.