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Showing posts with the label s corporation tax

Day 13: What to Know About 1099-NEC & Contractors: A Simple Guide for Businesses and Freelancers

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🧾 Day 13: What to Know About 1099-NEC & Contractors: A Simple Guide for Businesses and Freelancers In today’s flexible work landscape, hiring independent contractors can be a smart move—offering agility without the long-term commitments of traditional employment. But with this freedom comes responsibility, especially when it’s time to tackle tax forms like the 1099-NEC . Let’s break down what you need to know about using this form and working with contractors, without the tax jargon overload. πŸ“Œ What Is the 1099-NEC? The 1099-NEC (Nonemployee Compensation) is an IRS form used to report payments made to nonemployees for services. It replaced the old use of Form 1099-MISC for service payments starting in 2020 . You’ll need to issue this form if you paid: $600 or more in the calendar year To an individual or business not classified as an employee For services (not products or rent) Who is not incorporated—i.e., a sole proprietor or LLC taxed as such It goes to both t...
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Should You Elect PTET for Your S-Corp?

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πŸ’‘ Should You Elect PTET for Your S-Corp? Pass-Through Entity Tax (PTET) is a strategic state-level workaround to bypass the $10,000 SALT deduction cap on your federal return. It lets your S-Corp pay state income tax at the entity level , turning a limited personal deduction into a full business expense. Here's how to evaluate if it’s right for you: ✅ Step-by-Step PTET Decision Checklist ❓ Question ✔️ Consider This Does your state allow PTET? Over 30 states offer PTET elections—check your state rules. Do you owe significant state income taxes? PTET is most valuable if your state tax exceeds $10,000. Are all shareholders residents of the state? Nonresident shareholders may disqualify or complicate election. Does your business qualify (not SSTB)? Some states or new laws may exclude service-based entities. Are you set up for entity-level payments? You must file, pay, and record PTET correctly through the S-Corp. Are you ready to track PTET credits? Owners receive credits o...
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