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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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My husband owns his own business and we are considered ...

Customer Question

My husband owns his own business and we are considered a C-Corp. He get paid a salary every two weeks. We pay income tax, social security and medicare once a month and file 941s every quarter. Last year in addition to his salary we took several draws. Where do I claim the draw money on my personal taxes. I am afraid if I include the draw money on his W-2 it is going to send up a red flag because it won''t equal the amounts on the 941s.
Submitted: 8 years ago.
Category: Tax
Expert:  RD replied 8 years ago.

Normally draw from C corp will be considered as dividend income and will be reported on Sch B on your personal tax return.

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

RD and 3 other Tax Specialists are ready to help you
Expert:  RD replied 8 years ago.

Please note that distributions to the extent of accumulated and current earnings and profits is dividend. Any distribution over this amount will be return of capital and may be taxable as capital gain/loss.

You may want to review Publication 542 for more details

http://www.irs.gov/publications/p542/index.html

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

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