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Ask Lane Your Own Question
Category: Social Security
Satisfied Customers: 11592
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial, Social Security & Tax advice since 1986
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A client has 1120S business and does not always pay himself,

Customer Question

A client has 1120S business and does not always pay himself, thus does not show w-2 income every year. Is he given social security credit for income from business that is shown on K-1. In years of profit social security was paid on income thru personal 1040.
If none of this counts can he apply for Medicare by paying medicare a monthly premium?
Submitted: 1 year ago.
Category: Social Security
Expert:  Lane replied 1 year ago.
The schedule C is many times used as a proxy, a substitute, ( because SS & medicare is NOT levied against Schedule K profit allocation) to go back and pay SS & Medicare tax for PRIOR years....And it's not the schedule C alone, but rather the schedule C's profit that flows to Schedule SE, which how self employed individuals (sole proprietors, partners, LLC's not taxed as corporations) pay into the social security and medicare system....This is why IRS REQUIRES that S-Corp shareholder/employees pay themselves a reasonable salary .. so that the SS & Medicare taxes can be paid against the salary (1/2 from payroll withholding and the other 1/2 by the S-Corp itself - as with any other employee of a corporation)...Going forward the shareholder/employee needs to pay himself a salary....But yes, if he does not hav enough years in the system, once he's 65 or older, he can buy into Medicare by paying monthly premiums for Part A hospital insurance....He can also join Part B and pay the same premiums as other people. In both cases, you must be a U.S. citizen or a legal resident (green card holder) who has lived in the United States continuously for at least five years....Let me known if you have questions...lane......I hold a law degree (JD, Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate, both for-profit and non-profit, and tax advice, since 1986
Expert:  Lane replied 1 year ago.
Did you see my answer?
Expert:  Lane replied 1 year ago.
Did you see the answers