Should a single member LLC with an S corp status be taxed a self- employed and taxed at the corporate level. the 1040 form adding the 2 taxes. Thank you

Forum|Forum|6 years ago
December 6, 2019
3 replies
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Best answer by IRonMaN

No. You prepare an 1120S for the business and use the K-1 generated from the 1120S to prepare the 1040. Hopefully the business generated a W-2 for the wages that were paid out to the shareholder during the year.

IRonMaNAnswer

Level 15

No. You prepare an 1120S for the business and use the K-1 generated from the 1120S to prepare the 1040. Hopefully the business generated a W-2 for the wages that were paid out to the shareholder during the year.

Slava Ukraini!

T

TaxGuyBill

Level 15

So to expand on what the others have said:

The corporation does not pay any income taxes.
The corporation needs to pay the shareholder "Reasonable Compensation" and give the shareholder/employee a W-2, and the corporation will file/pay payroll taxes (Social Security and Medicare, Unemployment, etc.).
The shareholder/employee will enter the K-1 and W-2 on his 1040. Both are only subject to income tax, not Self Employment tax.
If the corporation issued the shareholder/employee a 1099, or the shareholder/employee is otherwise reporting the income on Schedule C of the 1040, that is wrong. The corporation needs to issue a W-2 (and file/pay all of the associated payroll forms).

abctax55

Level 15

"...the 1040 form adding the 2 taxes."

That *is* incorrect.

(Sounds like PEBCAK to me)

HumanKind... Be Both

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