My husband receives a 1099 from a company for his sales but he is incorporated as a S- Corp with another person. He gets weekly checks through the S -Corp no matter what has hit the bank in his name from the other company. At the end of the year, do we ignore the 1099 and put all his income on a Schedule K-1 and record that on the Schedule E? If so, how should he report all of his expenses from his business. (He works from home and all expenses come out of our personal account.)

I want to make sure I'm understanding what you're saying here first. The 1099 is for something the company did, right? If that is the case, it's part of the company's revenues, not your husband's. (Even though it's flow-through income, you still must separate what is the company's and what is his.) I guess the reason I'm confused is because he's working from home, but is in an S corp with another person, and I'm messed up over what might be his personally, and what is the corporation's. And does this S Corp also have an office somewhere? And what about expenses of the corp that the other person may be paying? (I would suggest getting an account in the corp's name and have all company expenses come out of there.)

I'm not sure I personally will be able to answer your question as I'm not a tax expert, but whoever answers it, the information needs to be clear about what is what. What I can tell you is that you need to be keeping a set of books for what belongs to the company. (For instance, if that 1099 is something the company did, it's revenue on the company's books.) The books will then be put together, an 1120S & Schedule K done, and then K-1's done based on each person's share of everything. There could be some adjustments that need made on the Sch. K. A K-1 is reported on Sch. E. The checks he gets are theoretically distributions.

A Sch. C is for a sole proprietorship. You haven't made it clear if he's doing anything under a sole proprietorship, rather than under the S Corp.

Since I'm not a tax expert, I'm not sure how to handle that working at home thing. I could deal with that if he were a sole proprietorship (I have to do that myself), and I could deal with it if he worked as a regular employee, which turns it into an itemized thing. But working at home as part of a S Corp -- that I'm not sure about. Expenses that are obviously for the company are still part of the company. (Like you pay for advertising or something.) But what I'm questionable on is things that would be considered "business use of your home" -- i.e. proportion of electric, or a dedicated phone line, proportion of ISP, etc. (If no one else gets to you, I can try to look that up.)

There is a tax forum, with tax experts on it, and I might suggest posting over there. (There is one person in particular who does not come on these boards, that I've ever seen.) There always seems to be an assumption that all accountants do taxes, and um, well no they don't. But you need to provide much more detailed information. People think they can provide two sentences of stuff -- but it's more complicated than that and sometimes minor details can make a difference. And of course, no one can do your taxes on a forum. If you seriously don't know how to handle the 1120S and K-1's, then I also might suggest you make it worth the money to get an accountant to do it.