S Corporation Salary

Forum|Forum|3 years ago
December 19, 2022
2 replies
19 views

Client's S Corporation Gross receipts are $381,000.

He pays himself a salary of $215,000

He has misc. expenses of $20,410

His business income is therefore $145,814 (381,100-215,000-20,410)

I will report the $145,814 on Schedule K-1 (Form 1120-S).

I show him owing Federal taxes of $25,091

Does he have to report the $215,000 salary any other place and pay any other taxes?

Thanks for your responses!

ProSeries Professional

This topic has been closed for replies.

Best answer by Terry53029

S corps have to issue w2 to officers that do services for the S corp. see fs-2008-25. http://www.rcreports.biz/pro/docs/irs.fs.2008.25.pdf

ljr

Level 9

He should have a w2 for the salary and a K1 for the net profit. The total of the 2 amounts are taxable on his 1040. You show him owing the $25K on his personal tax return? Did you take into consideration any taxes withheld on his payroll? You don't say where he lives but me might owe state and local income taxes

M

MinvestAuthor

Level 3

My client lives in Florida...no sales taxes

He created an S Corp in November 2021...only income is from his business in 2022...he did not work for an employer, so no W-2

No taxes were withheld in 2022

I'm preparing Estimated tax vouchers for him.

My concern is what taxes are due on the $215K salary were are claiming as an expense on his 1120-S tax return.

Thanks for your response.

ljr

Level 9

He needs to have a W2 from his own s-corp - he is both an owner and an employee. How can you say he paid himself a salary of $215K without a w-2? it sounds like he took distributions not salary. If there is no w-2 then he DID NOT take a salary. Where is the withholding for social security and medicare as well?

J

JBenciv1

Level 3

You still have 11 days to get it right. You need to get a payroll processer and give him a paycheck pronto, for whatever would be considered reasonable compensation for his services, and get said pay on a 2022 W-2 form. Otherwise, you are risking a visit from the tax man and a reclass of distributions to salary and the accompanying payroll taxes, interest and penalties that come with it.

Sign up

Login with SSO

Let's get you signed in

Login with SSO