USA Sole Proprietor Paying an S Corp

[Elofox]

I'm a sole proprietor and I partnered with an actual S Corp company on a project. I paid them their share.

When I file my taxes in April and need to deduct the amount I paid the S corp (so I don't get taxed on it), do I need to show proof of the amount I paid them (check images)? Or does the IRS take your word for it and in case of audit, then you show proof?

How does it work?

Thanks

 

[StanleyR1]

You do not need to provide proof of payment when filing your tax return.

If you received full payment for the project then paid the S Corp, it will be reflected in your accounting records as income for the payment received and expense for the amount paid to the S Corp.

As a sole proprietor, you are likely filing a Form 1040 tax return with Schedule C - Profit or Loss from Business (Sole Proprietorship). The payment to S Corp will be reflected there, and you will only be taxed on your profit. not the full amount you received.