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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4168
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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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: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year 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 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

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If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  Lane replied 1 year 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 1 year ago.
What do you mean "not covered by withholding"?
Expert:  Lane replied 1 year 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 1 year ago.
Are other customers able to chat with you. I don't have the option to respond to chats.
Expert:  Lane replied 1 year 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, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4168
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 8 other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.

Thanks much.

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

Lane

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