How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Lane Your Own Question
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11180
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
1929974
Type Your Tax Question Here...
Lane is online now
A new question is answered every 9 seconds

I have irregular income in my S-Corp. How to I report W2 income

Resolved Question:

I have irregular income in my S-Corp. How to I report W2 income on it? Quarterly or annually?

If quarterly, then when I don't have any income why I am I paying tax?
Submitted: 3 years ago.
Category: Tax
Expert:  Lane replied 3 years ago.

Lane :

Hi,

Lane :

Is it possible that you'll have loss for the year?

Lane :

The S corporation. itself, generally does not pay income tax, and so does not have to make estimated tax payments. You as a shareholder of an S corporation, however, do have an obligation to file estimated taxes with respect to your share of the profits

Lane :

Because S-Corps don't pay income taxes, the shareholders DO ... You are required to make quarterly estimated tax payments if you expect to have more than $1,000 in tax liability in any year that is not covered by withholding.

Lane :

Because shareholder-employees receive both wages and profits from the S-Corporation, there is a strong temptation to pay a lower salary and a higher profit distribution. Wages are subject to FICA payroll taxes. The S-Corporation will pay the employer's share of FICA taxes (7.65%), and the employee will pay the other share of FICA taxes (also 7.65%). Between the S-Corporation and the shareholder, wages are subject to a combined 15.3% payroll tax, plus the shareholder's income tax rate. Profit distributions, however, are not subject to FICA payroll taxes; they are subject only to the shareholder's income tax rate. So all things considered, the shareholder-employee will have a strong preference to pay herself a minimal salary and thereby increase the profit distribution. ... BUT

Lane :

If there's no money coming to pay a salary WITH, and hence no profits to distribute, you are right ... no need to pay anything or file anything until you do your 1120-S at the end of the year and use the K-1 to carry any losses to your 1040

Lane :

Let me know if you have questions

Lane :

Lane

Expert:  Lane replied 3 years ago.


Hi,

... just checking back in here, as I never saw you come into the chat.

Let me know if you have any questions

Lane
Customer: replied 3 years ago.
What do you mean "not covered by withholding"?
Expert:  Lane replied 3 years ago.


Income that isn't covered by withholding from wages BY the company, (withholding that would show up on a W-2) i.e., dividends, profit distributions, interest.

Again that part was simply the general rule for ALL taxpayers individually (not necessarily specific to your S-Corp)



Customer: replied 3 years ago.
Are other customers able to chat with you. I don't have the option to respond to chats.
Expert:  Lane replied 3 years ago.


Yes they do ... (not sure why that might be happening).

What you can do is just drop this questions and never rate (it will time out).

Then ask a different question and say "FOR LANE ONLY," at the beginning

Otherwise we CAN just go back and forth this way

SORRY ...

Let me know

BotXXXXX XXXXXne here,however, is that if your loss is not from having paid yourself a salary (in other words you had a loss and didn't pay yourself a salary at all) the all you need to do is the 1120S for purposes of the loss carryforward.

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

Thanks much.

Again, let me know if you need more here..

Lane