Followup question on S Corp

Perhaps. You say that you "show it" as salaries. Did you indeed pay it as a salary, withholding FICA and income tax and filing required 941 and 940 and state SUTA reports?

ChEAr$, Harlan Lunsford, EA n LA

There is a word to describe an entity that pays Salaries and Wages: Employer. Besides paying out the pay envelope check, the employer must take out withholdings and pay them out with the employer's employment taxes to the various taxing authorities frequently during year(probably monthly in this income range.) At a minimum, you would have Fed income tax withholding, Employee and employer FICA, employee and employer Medicare tax,, FUTA, SUTA, and Worker's Comp. Most states and many municipalities have their own income tax. Employment taxes(not including the share withheld from wages) are sepa- rately stated on Form 1120S.

Also, there probably should be some sort of annual fee to the state of incorporation, and also fees and or taxes to the state or states in which you are doing business.

Bill Patch

"kbutterly" wrote

Did you ever.

There are (by now late) payroll tax returns (Forms 941, 940, state) to prepare and file - and pay the tax due. To file most of those forms require state tax ID numbers - which I suspect you don't have yet. The company would issue you - the employee - a W-2 for your wages - and that amount goes with all other W-2's to Line 7.

If those wages paid to you by the company zero out profits (the mathematical complexities of that are staggering), then the K-1 would show $0. If you get paid wages, properly reported on W-2, then Schedule SE is not involved. In fact, if there are "S" corporate profits still remaining on the K-1, Schedule SE is not involved.

Here's a suggestion, take your stuff to a local CPA or EA for help. Be humble.