Schedule C filer paying himself on a W-2

[joe7230]

A sole proprietor pays himself on a W-2.  He is not an S corp.  How can I deduct his salary on the schedule C. 

[Terry53029]

You don't have salary as sole proprietor, so you can't deduct it. Did he also file 940- 941's 

[BobKamman]

I think this question comes up here every year or so.  It's not right, but it's a solution for some small business owners who have trouble keeping up with quarterly payments.  Three weeks away from an extended due date, I would deduct it as wages and tell him not to do it again.  Either take a monthly draw at the same time he makes a monthly ES payment; or set up an LLC taxed as an S corporation.  

[joe7230]

What line on the 

What line on the schedule C would you enter the sole proprietor's wages?  Line 37 specifically states "do not include owners wages"  Line 11 states contract labor.  Where do you recommend I enter the amount?

[abctax55]

Under 'owner draw'.... which is NOT on Sch C.

The payroll reporting needs to be amended/corrected as a Sch C owner is not to be paid via W-2.

edit....

Or live dangerously/run with those scissors and follow Bob's advice.  

[IRonMaN]

September 26th?  I would seriously consider taking those scissors and run.  Put the amount on the "wages" line on schedule C and after October 15th start amending the 2024 payroll tax returns to do things correctly for the 2024 tax return.

[abctax55]

Any retirement plan contributions involved?

[BobKamman]

Line 37.  If they try to send him to Leavenworth I'll show up as a character witness.  

One caveat:  Does this result in a Schedule C loss?  That makes it look as if he is trying to buy Social Security credits.  I would adjust the deduction so it's break-even, in that case.