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Zhannaxena
Zhannaxena, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 42
Experience:  I am a NYS CPA as well as a CIA, CRMA and Licensed Real Estate Agent.
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I own an S-Corp. I showed a net loss of $7129 on last years

Customer Question

I own an S-Corp.
I showed a net loss of $7129 on last years tax return and have a carryover loss of $8187 form the previous years tax return.
My queation is this.
If I take a full time job on the books and apply these losses towards deductions or dependants, what will my annual salary have to be for me to take home $925 a week? The company is located in New York City but I am not a resident and they pay bi-monthly.
Submitted: 1 year ago.
Category: Tax
Expert:  Zhannaxena replied 1 year ago.

Zhannaxena :

Hello, how are you?

Zhannaxena :

(as soon as you respond - we'll start reviewing your question)

Zhannaxena :

Before I can answer the question I need to know:

Zhannaxena :

1. Are you married, do you have children?

Zhannaxena :

2. Where are you a resident?

Zhannaxena :

3. Do you take an itemized or standard deduction annually? If itemized, how much?

Zhannaxena :

Let me know - thanks.

Customer:

I am divorced and have one child. My ex-wife and I alternate claiming her. The upcoming year isn't my turn.

Customer:

I am a resident of Nassau County.

Zhannaxena :

Hello

Zhannaxena :

Ah ok, so let me do the calculations then:

Zhannaxena :

So $7129 plus $8187 = $15,316 in operating losses

Zhannaxena :

are you the sole owner of this S corp? All these losses go to you?

Customer:

I don't know the answer to your third question. How would I find out? Can I look on my copy last years tax return? Corporate or personal ?

Zhannaxena :

oh I mean, do you run this business alone or with others?

Zhannaxena :

or are you a passive investor in the S corp?

Zhannaxena :

do you receive a K-1 at the end of the year?

Customer:

Yes, I am the sole owner. I would love to split the losses over the next 2 years if I take the new job.

Zhannaxena :

And another question, why is there a carryover loss? Did your accountant classify this as passive income or active income?

Zhannaxena :

Passive income means this is more of an investment for you.

Zhannaxena :

Active income means you actively participate in running this business.

Zhannaxena :

(are you having trouble with this chat?)

Customer:

I don't know. where on the tax return can I find out ???

Zhannaxena :

Ok, do you have the return with you? Do you see a Schedule E on your tax return?

Customer:

hold on.

Zhannaxena :

The reason this is important is because passive losses can only offset passive income. Active losses can offset ordinary income, like wages. I have a feeling that the reason you have a carryover is because it's a passive loss.

Zhannaxena :

Sure, take your time.

Customer:

I have an 1120S, 1125A, and schedule K-1

Zhannaxena :

Ok great, where on the K-1 does it show the loss - which box #?

Customer:

i also see CT-3S and CT-34-SH

Zhannaxena :

Yeah that's fine, those are NYS s-corp schedules

Zhannaxena :

I am more interested in the K-1 and where the loss appears, which box is it in?

Customer:

okay. On for K-1 (form 1120S) the loss is on line 1. Then again on K-1 (form CT-3-S) it's on line 11.

Customer:

Where are you located ???

Zhannaxena :

I am located in NYC. I live in Queens.

Zhannaxena :

Why?

Zhannaxena :

Line 1 - excellent, ordinary business loss.

Zhannaxena :

Ok, it should apply against ordinary business income then - thanks.

Zhannaxena :

Ok, let me do the calculation then.

Customer:

Nothing. I just like you : )

Zhannaxena :

Oh, well, thank you, XXXXX XXXXX it. :)

Zhannaxena :

ok, so here it is, the government is going to take about 25% via federal and NYS taxes

Zhannaxena :

You can make up to $79450

Zhannaxena :

Here is the math: $79,450 - $15316 = $64134

Zhannaxena :

$64,134 * 0.75 = $48,100

Zhannaxena :

$48,100/52 weeks = $925 per week

Zhannaxena :

(I am assuming you get paid 52 weeks per year)

Zhannaxena :

Does that answer your question?

Customer:

Sorry. I am confused.

Zhannaxena :

Hi, sure, what are you confused about>?

Zhannaxena :

Your annual salary should be $79450 in order to take home $925.

Zhannaxena :

(per week)

Customer:

So I my anual salary would have to be $79, 450 to take home $925 a week with my losses?

Zhannaxena :

This calculation takes into account your tax bracket, your NYC non-resident status and your losses (both years).

Zhannaxena :

yes, exactly

Customer:

They want to pay me around $55K.

Zhannaxena :

Ah ok, let me redo the calculation based on that.

Customer:

You number cannot be right.

Customer:

How many depandants do I put on the form when you first start a job?

Customer:

I was thinking I could safely put 3 or maybe even 4 !

Zhannaxena :

For someone who is single, put 1. But since you have the loss, you can put 3.

Zhannaxena :

So if you're making $55,000 per year, and take home $41,250 after taxes, your salary post-tax is $793 per year.

Zhannaxena :

However, since you have the loss.

Customer:

salary post??

Customer:

$793 per year ??

Zhannaxena :

Sorry phone call.

Zhannaxena :

no, no $793 per week.

Zhannaxena :

Ok, there are two ways to go about it.

Zhannaxena :

If you take 1 allowance on your W-4, you'll receive a refund at the end of the year.

Zhannaxena :

If you take 3-4 allowances on your W-4, you'll break even (approximately) at the end of the year.

Customer:

I want to try and come close to breaking even.

Zhannaxena :

So in the first circumstance, you'll get $793 every week in your paycheck. But at the end of the year, you'll receive a refund.

Zhannaxena :

Ok, let me do the breakeven calculation.

Zhannaxena :

Ok, so if you take 3 allowances, you'll be making $899 per week.

Zhannaxena :

$55,000 salary, take home 85% or $46,750. So your weekly salary (assuming 52 paychecks) is $899.

Customer:

Bi-monthly they pay.

Zhannaxena :

In that case its $1947 bi-monthly

Customer:

Okay, so if I propose an anual salary of $55,000 a year AND claim 3 dependants, my bi-monthy check will be appox. $975 per week take home? Roughly...Correct ???

Customer:

Can you email me your calcualtions?

Customer:

My email is :

Customer: XXX@XXXXXX.XXX
Customer:

My name isXXXXX

Zhannaxena :

Hi Herby, your e-mail came back all XXXs, they don't allow the exchange of emails and phone numbers unfortunately.

Zhannaxena :

I got in trouble for that once.

Customer:

I am also looking for a new accountant so if you want to talk about my situation please feel free to call me anytime.

Zhannaxena :

Yes, $899 per week, correct.

Customer:

(XXX) XXX-XXXX

Zhannaxena :

Your phone number came back like this:



(XXX) XXX-XXXX


Customer:

five one six eight eight seven one two three four

Zhannaxena :

got it

Customer:

drop me a text and I will text you my email

Customer:

and $1947 divided by 2 comes to $973.50

Zhannaxena :

It's not by 2

Customer:

wouldn't this be my take home amount for a week? roughly of course

Zhannaxena :

remember 52 weeks per year - if you got paid every other week, that's 26 paychecks

Zhannaxena :

if you get paid twice a month, that's 24 paychecks

Zhannaxena :

so that's why it's not double the weekly, it's slightly more

Customer:

Okay Z. I gott get to Long Island. You have been a great help. I am going to pay the $30 now !

Zhannaxena, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 42
Experience: I am a NYS CPA as well as a CIA, CRMA and Licensed Real Estate Agent.
Zhannaxena and other Tax Specialists are ready to help you

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