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I have a few questions about the taxes I'm preparing for…

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I have a few...

I have a few questions about the taxes I'm preparing for myself regarding s corps and net operating loss carryover

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

I am the sole owner and operator of my s corp. It is 3 years old. I lost a few thousands dollars in year 1 or 2. This year I made money and owe a lot of taxes on my personal return via a K-1. I was wondering if I'm able to carryover some of the loss from years 1 and 2 to get some tax savings. In year 1 and 2 I still personally made money from other income streams. I've read that you can't carryover anything from an scorp NOL if you personally made money in those years. I just want to verify that this is true and that I can't do anything with carrying over from years 1 and 2

Accountant's Assistant: Is there anything else important you think the Accountant should know?

I have one additional question: The scorp business I am referring to is for my IT software freelancing. In 2018, I paid myself about $9K from this business from earnings in 2017. I'm unsure if I'll make much money with IT software jobs in 2018. If I have negative profit on my K-1 for 2018 because of this, I'm afraid I won't be able to do much with it because I, personally, will end up making money in 2018 due to my w2 earnings from a fulltime job. I'm also a musician and will make probably $10K in 2018 as a 1099 worker. Previously, I have been adding these 1099s on my personal tax return, not into the scorp I mentioned for IT software. I'm thinking about asking my musician employers to pay me through this scorp, so I can take advantage of this 9K I paid out earlier this year. Aside from just asking if I'm wise to do this, will the IRS have any problems with me doing so many varied activities in one scorp (musician, IT software freelancing, creating and selling my own software)?

Submitted: 3 months ago.Category: Finance
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3/31/2018
Financial Professional: PDtax, CPA, MBA replied 3 months ago
PDtax
PDtax, CPA, MBA
Category: Finance
Satisfied Customers: 5,089
Experience: Tax professional and business consultant for 35 years.
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Hi from Just Answer. I'mCustomer and can assist.

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Financial Professional: PDtax, CPA, MBA replied 3 months ago

Prior year s corp losses have already been claimed against other income for the prior years, so no bvenefit is directly available.

If the losses from prior years were more than your reported income from other sources, you could have a net operating loss (NOL) to use, but this is unlikely. That is a carryover at the personal level.

You can report your freelancing income as S corp income, even though the 1099s were issued to you personally. Simply report the income on 1040 (IRS will be looking for it there), then claim an expense (1040, other income, line 36) and deduct the exact same amount. Then report the income on the S corp as additional income.

If you paid yourself via wages, that is better from the S corp. IRS wants a wage to be paid from S corps.

Thanks for asking at Just Answer. Positive feedback is appreciated. I'mCustomer

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