In most cases, S Corporations do not get 1099s. When a business pays an S Corp for services, the payer is not required to issue Form 1099-NEC or Form 1099-MISC, because the S Corporation reports the income directly to the IRS on its own return. That general exemption has real exceptions, though: medical and healthcare payments, legal fees and settlement proceeds, substitute dividend payments, purchases of fish for resale, and payments from federal executive agencies all trigger 1099 reporting even when the recipient is an S Corp.1Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025)
Why the Exemption Exists
The IRS instructions for Form 1099-NEC explicitly exclude payments to corporations from the reporting requirement, and that exclusion covers S Corporations along with C Corporations and LLCs that have elected corporate tax treatment.1Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025) The logic is simple. An S Corporation files Form 1120-S each year and reports its own income, deductions, and credits directly to the IRS.2Internal Revenue Service. About Form 1120-S, U.S. Income Tax Return for an S Corporation A parallel information return from every client would duplicate what the agency already has.
For an S Corp, that means invoicing clients, receiving payment, and booking the money as ordinary business income. Clients have no obligation to tally annual payments or file a form at year end. For clients, it means one fewer contractor to chase for tax paperwork. This is one of the concrete administrative benefits of operating as an incorporated entity rather than a sole proprietorship or partnership.
Payments That Must Be Reported Anyway
The exemption is narrower than it looks. Several categories of payments are reportable to the IRS regardless of whether the recipient is a corporation, and S Corporations receiving these payments should expect a 1099 at year end.
Medical and Healthcare Payments
Payments of $2,000 or more to any provider of medical or healthcare services must be reported on Form 1099-MISC, Box 6, even when the provider is a corporation or professional corporation. That covers incorporated physician practices, hospitals, and other healthcare entities, along with payments health insurers make under accident and sickness insurance programs.3Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025) – Section: Box 6. Medical and Health Care Payments An S Corp operating a medical practice will receive these forms from insurers and business clients paying for medical services.
Legal Fees and Settlement Proceeds
Legal payments run on their own track. Fees paid to a law firm for legal services go on Form 1099-NEC, Box 1. Settlement proceeds and other payments connected to legal services but not paid for the attorney’s own work go on Form 1099-MISC, Box 10. Both requirements apply to incorporated law firms and individual attorneys.4Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (Rev. April 2025) – Section: Payments to Attorneys An S Corp law firm will get these forms even though the corporate exemption would otherwise apply.
Substitute Payments in Lieu of Dividends
When a broker receives substitute payments in lieu of dividends or tax-exempt interest on behalf of a corporate customer, those payments go on Form 1099-MISC, Box 8. The threshold is unusually low: just $10 in aggregate payments triggers the requirement. The IRS defines “customer” for this purpose to include corporations, so an S Corp holding securities in a brokerage account can receive this form.5Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025) – Section: Reportable Payments to Corporations
Fish Purchased for Resale
Businesses that buy fish for resale must report total cash payments of $600 or more to any person in the fishing trade on Form 1099-MISC, Box 11. Incorporation of the seller does not change the rule.6Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC (04/2025) – Section: Box 11. Fish Purchased for Resale
Payments From Federal Executive Agencies
Federal agencies operate under a separate rule. When a federal executive agency pays a corporation for vendor services, the payment must be reported on an information return. The tax code strips the corporate exemption specifically for payments from federal agencies.7Internal Revenue Service. Information Return Reporting for Federal Agencies S Corporations that hold federal contracts should expect these forms.
Real Estate Sales Are Not an Exception
Some checklists list Form 1099-S for real estate transactions as another exception to the corporate exemption. It is not. The instructions for Form 1099-S exempt transactions where the seller is a corporation, including S Corporations.8Internal Revenue Service. Instructions for Form 1099-S (Rev. April 2025) If your S Corp sells real estate, the reporting exemption holds.
Filling Out Form W-9 So Clients Apply the Exemption
Whether your S Corporation receives a 1099 often comes down to how the W-9 you sent the client was completed. Check the “S corporation” box on Line 3a for federal tax classification. That single checkbox is how the payer identifies your entity as generally exempt from 1099 reporting on service payments.9Internal Revenue Service. Form W-9 (Rev. March 2024) Request for Taxpayer Identification Number and Certification
Do not enter an exempt payee code on Line 4. The W-9 instructions specifically state that S Corporations must not use an exempt payee code, because that code’s exemption is limited to sales of noncovered securities acquired before 2012.9Internal Revenue Service. Form W-9 (Rev. March 2024) Request for Taxpayer Identification Number and Certification The payer determines your 1099 exemption from the entity classification checkbox, not the exempt payee code line. Enter the EIN, sign, and return the form promptly. Delays can trigger backup withholding on your payments.
If you receive a 1099-NEC anyway from a client who should have exempted you, the practical fix is usually to contact the payer, confirm your S Corp status, and ask for a corrected return. Report the income on Form 1120-S in either case. The 1099 does not create the tax obligation; the income does.
Your S Corp Is Not Exempt When It Is the Payer
The exemption runs one direction. It protects the S Corporation from receiving 1099s for its own services, but it does not reduce what the S Corp owes when paying independent contractors, freelancers, partnerships, and unincorporated landlords. Track those payments and issue the appropriate forms at year end.
For the 2026 tax year, the reporting threshold for Form 1099-NEC is $2,000 or more paid to a single recipient during the calendar year, up from the $600 threshold that applied through 2025 under Public Law 119-21. The threshold will adjust for inflation starting in 2027. Rent payments to unincorporated landlords also hit the $2,000 mark for Form 1099-MISC reporting.10Internal Revenue Service. 2026 Publication 1099 General Instructions for Certain Information Returns Payments to other corporations for services generally do not require a 1099, following the same exemption that protects your S Corp when receiving payments, subject to the exceptions above.
Collect a completed Form W-9 from every contractor before making the first payment. If a contractor refuses to provide a W-9 or gives you an incorrect TIN, withhold 24% of each payment and remit it to the IRS as backup withholding. Failing to collect backup withholding when required can make the S Corp liable for the uncollected amount.11Internal Revenue Service. Instructions for the Requester of Form W-9 (Rev. March 2024)
One reporting overlap that catches payers: if you pay a contractor by credit card, debit card, or through a third-party payment network like PayPal or Venmo, do not issue a 1099-NEC for those payments. The payment processor reports the amount on Form 1099-K, and IRS anti-duplication rules put the reporting there rather than on your 1099-NEC.12Internal Revenue Service. Form 1099-K FAQs: Third Party Filers of Form 1099-K When you pay the same contractor by a mix of methods, only the direct payments (check, ACH, wire, cash) count toward your 1099-NEC threshold.