How to account for W2 paid to S corp in Lacerte

[IRonMaN · Accepted solution]

You don't.  S corps can't walk or talk and therefore they can't earn wages.  So someone screwed something up along the path to year end.  So I need to ask - who created it and why is there a W-2 involved here?

[meos]

I know. He worked for this office (a PLLC) and they paid him under his EIN. Then they found out and gave him a 1099-MISC. So he got both a W-2 and a 1099-MISC for this year. I don't know how to account for the W-2.

[IRonMaN]

Who were the checks made out to?  If it was the shareholder, tell the other company to re-issue the W-2 using his Social Security number.  If they made them out to the S corp, never mind, I really hope someone didn't write a payroll check out to a business.  

[meos]

I really don't know. But on the W-2, it is the business name as employee.  I will tell him to do as you suggested. Thank you very much.

[IRonMaN]

You betcha!

[qbteachmt]

Your client needs to give them a W9 and then the PLLC doesn't report using Either Form; not a W2 and not a 1099-Misc, either. The problem with issuing a corrected W2 for the SSN is that any business expenses related to that contract are now not allowed as business expense. I would have them handle this as correcting for 0 wages; but they won't like that amendment process.

[sjrcpa]

"The problem with issuing a corrected W2 for the SSN is that any business expenses related to that contract are now not allowed as business expense" Why wouldn't business expenses paid by the PLLC be allowed?

[qbteachmt]

It isn't clear that the PLLC is also the S corp. I read this as two entities. The 1099-Misc is not required; but at least, it would be the correct reporting for the relationship for the PLLC making payments to the person who is working under the umbrella of their own S Corp. When people get handed a W4, they don't always understand that makes them a direct hire and not a contractor.