Finance

Have Finance Questions? Ask a Financial Expert Online.

Ask an Expert,
Get an Answer ASAP!

Finance

Second opinion] My partner & I have set up an LLC with SCorp

Customer Question
Second opinion] My partner &...
Second opinion] My partner & I have set up an LLC with SCorp filing. However, we need to quickly decide on the best tax benefit. He has been an independent contractor for 9 months with no tax filings. He has 3 months left of larger pay coming in. Would it be better to bill the last three months through the company or as an independent contractor. He is the only employee right now. He has no dependents and few deductions
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: I will be contributing to the company eventually but there is no capital in the co now.
Submitted: 1 month ago.Category: Finance
Show More
Show Less
Ask Your Own Finance Question
Customer reply replied 1 month ago
If 50% of the amount is via salary and 50% is via owners draws what type of tax is imposed on the draws?For instance the income to-date as an independent contractor is approximately $72,000 and no taxes have been paid yet on this. The remainder of the billings for the last three months may be $30,000-$40,000. Would it be possible to take $10k-$15k in salary and $15k-$20k in draws? I'm just wondering the tax liability that will be placed on the draws and worried about the taxes due on the $72k.
Answered in 1 hour by:
10/17/2017
Financial Professional: Lev, Tax Preparer replied 1 month ago
Lev
Lev, Tax Preparer
Category: Finance
Satisfied Customers: 30,137
Experience: Personal Investment, Tax Preparation
Verified

There is NO pre-set percentage how income should be divided between W2 and K1.

Yes - it is possible to divide equally.

Both types - reported on W2 and reported on K1 will be subject to income taxes - so for income tax purposes - there will not be any difference.

The difference will be with employment taxes only which are handles by S-corportaion.

Employment taxes are applied ONLY on wages reported on W2 and will be 15.3% for both portions paid by the employer (S-corportaion) and by the employee (withheld from wages)

.

The instructions to the Form 1120S, U.S. Income Tax Return for an S Corporation, state "Distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation."

The key to establishing reasonable compensation is determining what the shareholder-employee did for the S corporation.

Ask Your Own Finance Question
Customer reply replied 1 month ago
Is there a tax benefit of the accountable plan? Flowing expenses through a plan for home office etc instead of incurring the 2% of undeductable expenses
Financial Professional: Lev, Tax Preparer replied 1 month ago

The accountable plan allows to deduct business related expenses directly by the S-corporation.

That will cover employee business expenses as well which are reimbursed by the employer (S-corporation).

If reimbursed under not- accountable plan - such reimbursement should be included into taxable wages - subject to both - income and employment taxes.

Ask Your Own Finance Question
Financial Professional: Lev, Tax Preparer replied 1 month ago

To be an accountable plan, the reimbursement or allowance arrangement must include all of the following rules.

  1. Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services.

  2. You must adequately account to the payer for these expenses within a reasonable period of time.

  3. You must return any excess reimbursement or allowance within a reasonable period of time.

Otherwise - these payments are added to your taxable income.

Ask Your Own Finance Question
Financial Professional: Lev, Tax Preparer replied 1 month ago

I appreciate if you take a moment to rate the answer.

Experts are ONLY credited when answers are rated positively.

If you still have any doubts, need clarification - please be sure to ask.

I am here to help you with all Social Security / Tax related issues.

Ask Your Own Finance Question
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Preparer
Category: Finance
Satisfied Customers: 30,137
30,137 Satisfied Customers
Experience: Personal Investment, Tax Preparation

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Rakhi Vasavada

Rakhi Vasavada

Financial and Legal Consultant

2,608 satisfied customers

Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years

Megan C

Megan C

Certified Public Accountant (CPA)

2,218 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

Manal Elkhoshkhany

Manal Elkhoshkhany

Tutor

1,919 satisfied customers

More than 5000 online tutoring sessions.

JKCPA

JKCPA

CPA

844 satisfied customers

Bachelors degree and CPA with Accounting experience.

Eric

Eric

Financial Manager

559 satisfied customers

Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.

R. Klein, EA

R. Klein, EA

Accountant

480 satisfied customers

TurboTax Expert. QuickBooks Certified Pro Advisor

Dimitry K., Esq.

Dimitry K., Esq.

Attorney

332 satisfied customers

NASD Licensed Rep, 1997-2001, Business Attorney

< Previous | Next >

Related Finance Questions
I own a company with the stock symbol AGNC. I am looking for
I own a company with the stock symbol AGNC. I am looking for advice on whether or not this stock has a high probability of bankruptcy. I've owned it for over 6 years and currently have a paper loss. I… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
727 satisfied customers
What would the best life insurance policy be and my partner
What would the best life insurance policy be it's me and my partner his earning potential ya about 150k per year mine is about 40k . We are both in our late 30s with little savings. We still rent and … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,466 satisfied customers
I am 70 years old taking care of my mother who is 88. I have
My name is***** am 70 years old taking care of my mother who is 88. I have a mortgage of 50,000.00. I live in a very rural town of 320 residents. My mother and I probably will not live long enough to … read more
Curtis Mathews
Curtis Mathews
President
MBA
0 satisfied customers
I want to know how the Tax Reform Bill will affect the way
I want to know how the Tax Reform Bill will affect the way gambling winnings are dealt with. Now, you can write off your losses up to your winnings. I was told that the tax reform does away with that.… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
1. Should the option prices change when a company
1. Should the option prices change when a company surprisingly eliminates its dividend but its share price stays the same?2. Give two reasons why "short interest rebate" would be a negative interest r… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
727 satisfied customers
I have a film production company LLC registered in Florida.
I have a film production company LLC registered in Florida. However, my husband and I just moved to Colorado. I'm putting together a co-production deal with a company out of Indiana. We'll be doing th… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,466 satisfied customers
I have set up an llc for the sole purpose of owning shares
I have set up an llc for the sole purpose of owning shares in a C-corp. The C-corp currently has no business activity and a value based on 44 million shares and par value of 0.00001$/share. The C-corp… read more
Lev
Lev
Tax Preparer
30,137 satisfied customers
I am receiving a payment from my prior employment disability
I am receiving a payment from my prior employment disability insurance. Will I be taxed for that? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,466 satisfied customers
I'm getting ready to get a home equity line of credit. I own
I'm getting ready to get a home equity line of credit. I own my home outright and have no other liens. I plan to get about $ 50,000 line of credit, which is about 30% of home value. I plan to use proc… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
727 satisfied customers
I am considering, possibly, moving my 401k to a IRA. I am
I am considering, possibly, moving my 401k to a IRA. I am just in the starting phase of this. I still need to speak with my accountant.The retirement company that handles my account has sent, at my re… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I have a Texas LLC and we sell agricultural parts for
I have a Texas LLC and we sell agricultural parts for tractors, we have a contract manufacturer make our proprietary parts, then sell them to farmers. Farmers are obviously tax exempt, but are we also… read more
abci168
abci168
Principal
27 satisfied customers
In 2017 my brother, my sister, and I inherited about 18,000$
In 2017 my brother, my sister, and I inherited about 18,000$ from our Father. The money came from stock shares that our Father left for us in his will. Our Father passed away in 2011. After several ye… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,466 satisfied customers
Have a sub s corp rental properties fully depreciated wish
Have a sub s corp rental properties fully depreciated wish to do a joint venture not a sale or transfer of property.. How can this be done without triggering capital gains? … read more
Lev
Lev
Tax Preparer
30,137 satisfied customers
I have a looming $3000 in s/t cap gain & 34,000 in l/t cap
I have a looming $3000 in s/t cap gain & 34,000 in l/t cap gains & $100k in cash from stock sales.Best way to reduce the tax. Can't I take l/t gains over time. My income this year's was about 35K. I a… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
727 satisfied customers
My wife has a life insurance policy taken out in 1951 by her
my wife has a life insurance policy taken out in 1951 by her parents. it was from the Worcester county institution for savings in Worcester, ma. … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
We are entering into a 5-year lease for our small business
Hello! We are entering into a 5-year lease for our small business and trying to properly account for the leasehold improvements in QB (i.e. architect fees, permit fees, construction costs, and equipme… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I inherited my father's IRAs. I have accounts with Fidelity
I inherited my father's IRAs. I have accounts with Fidelity and Schwab. One of my Schwab accounts is titled Inherited; the other is listed as a Roth. The Fidelity account is listed as an IRA. My quest… read more
Lev
Lev
Tax Preparer
30,137 satisfied customers
What is the difference in payments and total interest on a
What is the difference in payments and total interest on a car loan total of $32,000.00 paid off in three years? Interest rate 4.99% vs 2.99%… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
727 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x