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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2563
Experience:  IRS licensed Enrolled Agent and tax instructor
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2015 is my first year in business. I filed an extension 1065

Customer Question

2015 is my first year in business. I filed an extension for my 1065 but realized it should have been an extension for 1120S since I take wages. It's a short year for 2015 as well - only two months. I want to stay on calendar year. How do I fix this?
Submitted: 8 months ago.
Category: Tax
Expert:  emc011075 replied 8 months ago.

Hi. My name is ***** ***** I will be happy to help you.

Have you filed an election with IRS to be taxed as scorp? Taking wages doesn't automatically makes you corporation or Scorp.

Customer: replied 8 months ago.
No election filed yet. I was going to elect with my first return since I missed the filing deadline. It wouldn't be a problem if I hadn't paid myself wages in 2015 and filed payroll tax returns. So, I can't file 1065 knowing I got W-2.
Expert:  emc011075 replied 8 months ago.

It is too late to file an extension and it is too late for filing the election. You can still file 1065 and report the W2 as income as well as the K1 income. Also file the election with your return for the current year.

Customer: replied 8 months ago.
Thanks. Another tax professional advised me to file 1065 as zero return, then file 1120S with late election attached to return and request penalty abatement. So wanted second opinion.
Expert:  emc011075 replied 8 months ago.

As long as you did the payroll return correctly the IRS may question it but it will not give you hard time about especially if you plan to switch to scorp. You would have a bigger problem if you were scorp and didn't pay yourself. It doesn't make much difference if the income is reported as salary (W2) or distribution from partnership (K1) subject to self-employment tax. Bot***** *****ne, taxes had been paid.

Expert:  emc011075 replied 8 months ago.

Filing late election could also be an option but then you would have to deal with the penalty. It would make more sense just file 1065 penalty free and make the election for the next year as trying to fix the late filing and deal with IRS bureaucracy.

Customer: replied 8 months ago.
Thanks for input.
Expert:  emc011075 replied 8 months ago.

You're welcome. Is there anything else I can help you with today?

Expert:  emc011075 replied 8 months ago.

And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.

Customer: replied 8 months ago.
No. That is all.