Pay Dividend to Employee with Federal Tax Witholding and no FICA

Make a personal estimated tax deposit using form 1040 ES. Also make it a habit of consulting with your accountant, especially on the topic of what constitutes a reasonable salary.

Just noticed that you said 1st quarter. Can we assume your company is a C corp with a fiscal calandar starting July 1st? If so then reasonable salary is not in play here.

Depends on if this is a C or an S corporation. For either, if you wish to treat it as additional payroll, you'll have to take out for FICA as well as FWT. If you want to simply pay the estimated tax, I'd do as Allan suggests & pay the 1040ES through the company using a regular check (not payroll) payable to US Treasury, and charge it to Dividends or Owners Draw depending on the type of corporation.

You may be able to eliminate the need for separate 1040ES payments by incorporating the payment into your regular FWT withholding. Just divide the quarterly or annual payment amount by the number of paychecks for the period & enter that as additional amount to be withheld for FWT (in your payroll tax profile). I've been doing this for years for my S corp & it's much easier than filing the 1040ES, also eliminates a big $ hit each quarter - money is sent in along with the tax deposit as you wanted.

Scott out.

Thanks to all. It's an S corp. Scott, yes this last item is pretty much what I want to do. The question really is HOW to "incorporate the payment into your regular FWT" without it coming out of a salary amount that carries FICA? I don't see how that's possible.

Yes, my accountant has advised on the suitable salary...

Fred

Create a paycheck. Do not pay wages. Change the Federal/State Withholding amounts to the amounts you wish. Under "Other Additions/Deductions" enter to "Dividends" (an Equity account) enough to zero the net pay. You will have to create this account as a payroll item addition.

Joanne,

Thanks! That's exactly what I was wanting to do and just needed a nudge in the right direction. It works great.

What? No pictures of Ilwaco?

Fred

I love that area. Spent many hours in the interpretive center last winter waiting to see a passing whale and watching the big barges laboring out to sea from the Columbia river in fantastic waves and winds. But first, the videos on Cranberries in Grayland and the Kite Festival at Ocean Shores.