Does an S Corp Get a 1099? Exceptions, W-9s, and the 2026 Threshold

An S corporation generally does not get a 1099 for the services it performs. The IRS treats an S corp as a corporation for information-reporting purposes, and payments to corporations for services are excused from Form 1099-NEC and 1099-MISC reporting. The exceptions are narrow but important: medical and healthcare payments, attorney fees, gross proceeds paid to lawyers, substitute dividend payments, and cash paid for fish must still be reported to a corporate payee. Starting with the 2026 tax year, when a 1099 is required, the dollar threshold that triggers it climbed from $600 to $2,000.

The General Rule

The S election changes how a company’s income is taxed. It does not change what the company legally is. For information-reporting purposes, the IRS treats an S corporation as a corporation, and payments to corporations for services are outside the Form 1099-NEC and 1099-MISC reporting requirement.¹

So if your S corp does consulting, design, IT work, cleaning, marketing, or almost any other service, your clients should not send you a 1099 at year end. The same treatment applies to an LLC that has elected S corporation tax status. When such an LLC completes a Form W-9, it checks the “Limited Liability Company” box and writes “S” for the classification, which puts it in the corporate lane for reporting purposes.²

When an S Corp Does Get a 1099

Certain payment categories override the corporate exemption. If your S corp receives any of these, expect a 1099 even though you are a corporation.

Medical and Healthcare Payments

Payments to any corporation for medical or healthcare services must be reported on Form 1099-MISC in Box 6. This covers physician practices, hospitals, pharmacies, and other healthcare providers organized as S corps, C corps, or professional corporations. Payments made by insurers under accident and sickness programs fall in here too.²

Attorney Fees

Fees paid to a law firm for legal services are reportable on Form 1099-NEC in Box 1, even when the firm is an S corp. The IRS created this exception specifically to counter underreporting in the legal profession, and it applies regardless of the firm’s entity type.²

Gross Proceeds Paid to an Attorney

Settlement money and similar funds that pass through an attorney are reported separately, on Form 1099-MISC Box 10, even if the attorney is not the ultimate recipient. This rule sits in a different section of the tax code (Section 6045(f)) than the general reporting threshold, so payers should confirm the current requirements when preparing Box 10 forms.²

Substitute Payments and Fish for Resale

Two more categories skip the corporate exemption. Substitute payments in lieu of dividends or tax-exempt interest go on Form 1099-MISC Box 8 no matter who the recipient is. And cash payments for fish purchased for resale are reported in Box 11 to any payee, corporate or not.²

What Does Not Trigger a 1099 to Your S Corp

Rent and royalties are commonly assumed to be exceptions, but they are not. The IRS instructions specifically exclude royalties paid to a corporation from 1099-MISC reporting, and rent paid to a corporate landlord is exempt on the same basis.² If your S corp is a property management company, though, note that you may still owe a 1099 to the individual owner you pass rent along to.

The 2026 Threshold Change

The One Big Beautiful Bill Act, signed into law in 2025, raised the general reporting threshold for Form 1099-NEC and Form 1099-MISC from $600 to $2,000 for payments made after December 31, 2025.³ Starting with the 2026 tax year, a payer only files if annual payments to a recipient reach $2,000. The threshold will be adjusted for inflation beginning in 2027.⁴

For an S corp, this matters in the exception categories above. If your S corp is a medical practice or law firm, you should now receive 1099s only from payers who cross $2,000 in a year, not $600. One caveat: forms filed in early 2026 for payments made during 2025 still use the old $600 threshold.

How Payers Know You’re an S Corp: the W-9

The Form W-9 is the mechanism that keeps unneeded 1099s from being issued. When a client asks for one, your S corp checks the “S Corporation” box (or, for an LLC taxed as an S corp, the LLC box with “S” written in the classification field) and enters its employer identification number. The payer keeps that form on file and treats you as corporate for reporting purposes.¹

Getting the W-9 out promptly is not just paperwork hygiene. If your S corp doesn’t provide one, the payer is required to withhold 24% of every payment as backup withholding and remit it to the IRS.⁵ The money is recoverable when returns are filed, and shareholders claim their share on their personal returns, but the cash flow hit in the meantime is real.⁶ Send a signed W-9 at the start of each client relationship and keep a copy.

Payments Through Credit Cards and Payment Apps

Payments made by credit card, debit card, or through third-party networks like PayPal, Venmo, or Stripe are reported by the payment settlement entity on Form 1099-K rather than by the paying client on a 1099-NEC or 1099-MISC.² That means an S corp collecting through Stripe or PayPal may receive a 1099-K from the processor even though its clients issue nothing.

Under the One Big Beautiful Bill Act, the 1099-K threshold reverted to $20,000 in gross payments and more than 200 transactions per year, the standard that applied before the American Rescue Plan attempted to lower it.⁷

If Your S Corp Receives a 1099 It Shouldn’t Have

It happens routinely. A client’s bookkeeper sees payments over the threshold, doesn’t consult the W-9 on file, and issues a 1099-NEC anyway. The IRS receives a copy, and its matching program may flag your Form 1120-S if the amount doesn’t line up with a specific piece of reported income.

Contact the payer and request a corrected form showing $0. Filing the correction with the IRS clears the mismatch out of the matching system.⁸ The income itself still gets reported on your S corp return, so there’s no tax shortfall either way. Getting the correction just avoids automated notices later. If the payer stalls past the end of February, the IRS can be reached at 800-829-1040 for help.

The best defense is prevention. Send your W-9 clearly showing corporate status at the start of every client relationship, keep a copy of what you sent, and retain the W-9s you receive from your own vendors for at least three years after the last return they support.⁹

1
Internal Revenue Service. Am I Required to File a Form 1099 or Other Information Return
2
Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
3
Office of the Law Revision Counsel. 26 USC 6041 – Information at Source
4
Internal Revenue Service. Form 1099-NEC and Independent Contractors
5
Internal Revenue Service. Backup Withholding
6
Internal Revenue Service. Topic No. 307, Backup Withholding
7
Internal Revenue Service. Treasury, IRS Issue Proposed Regulations Reflecting Changes From the One, Big, Beautiful Bill to the Threshold for Backup Withholding on Certain Payments Made Through Third Parties
8
Internal Revenue Service. What to Do When a W-2 or Form 1099 Is Missing or Incorrect
9
Internal Revenue Service. How Long Should I Keep Records