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: 11612
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 need to pay federal taxes for a small business incorporated,

This answer was rated:

I need to pay federal taxes for a small business incorporated, with three shareholders, including me. This is our first year, and we started paying ourselves with checks on February the first, and stopped paying on May 3 and after that, we paid ourselves like 6,000.00 in cash. I now we are late and we need to pay federal taxes. My question is: Can we report in 941 the amount paid in checks only or do we need to add the 6000 in cash to withhold the federal ss and medicare taxes?. we use quickbooks for payroll.

Lane :

Hi,

Lane :

If this is an S-corp, you can take money out in essentially three ways ///

Lane :

Salary, Dividends, and withdrawing cntributed capital

Customer:

a c-corp

Lane :

IRS wants you to pay yourself a "reasonable" salary (so they can get that 941 money BUT ...

Lane :

you can also pay yourself dividends

Lane :

the salary you pay taxes on (1/2 of the SS&Medicare should be withheld) and the company pays the other 1/2

Customer:

we paid salaries, since this is our first year, we did not earn much

Lane :

but on the dividends, that's jut profit that's being distributed to you as a shareholder

Lane :

right was getting to that

Lane :

you do need to do the 941 on the salary pary ... but since it IS your first year and there are unknowns...? treating the 6000 as simply a dividen will fly

Lane :

(sory for th typos)

Lane :

the dividend will come through the K-1 to the 1040, and you'll just p[ay tax on that YOURSELF

Lane :

(no payroll taxes)

Customer:

ok, so we need to report the amount paid in checks and the rest would be dividents?. That's fine. Thanks

Lane :

some peopl;e will (again in the first year) takie it ALL as dividends

Lane :

yep

Lane :

that's the cleanest way to do ut ... IRA won't say you're trying to escapie the payroll taxes by calling it ALL dividends

Lane :

"IRS"

Customer:

Ah! ok. That's very helpfull

Lane :

Great ...

Customer:

Now I feel better

Customer:

Thank you

Lane :

You're very welcome ... Can I help with anything else?

Customer:

That'll be all for the moment, very helpful, thank your

Customer:

thank you

Lane :

Great ... godd luck, sounds like you're off to a good start

Lane :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Lane and other Tax Specialists are ready to help you


Thanks much Amarilis


If you'd like to work with ME again just say "For Lane only," at the beginning of your next question.


Thanks again,

Lane