Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

I have a s corp and for corporate year 2008 I recieved 57,200

Customer Question
in consutling fees under my...
I have a s corp and for corporate year 2008 I recieved 57,200 in consutling fees under my corporate account. I issued w-2 to myself for 12,000 and paid tax under my individual filing. I had other expenses which left a balance of 40,161 in cash. I did not distribute any of this cash in 2008 or 2009. Do I owe taxes on this cash in 2008 or 2009? I did not file a 1120S for either year. The IRS contacted me and I am filing the 1120S forms today. Do I show 0 tax owed or do I owe taxes, plus interest, plus penalties?
Submitted: 6 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 1 minute by:
1/3/2011
Tax Professional: Jacy, Certified Public Accountant (CPA) replied 6 years ago
Jacy
Jacy, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 568
Experience: Nine years individual income tax preparation and consulting
Verified

Jacy :

hello,

JACUSTOMER-88qbq30p- :

hi

Jacy :

Yes, the corporate profit is taxable to the shareholders each year. When you prepare the 1120S, you will prepare a K-1 for yourself. The K-1 tells the shareholder how much of the corporate income to report on their individual return based on ownership percentage.

Jacy :

The corporation does not pay taxes on its net income.

JACUSTOMER-88qbq30p- :

I paid 12,000 via w2, should I have paid more?

JACUSTOMER-88qbq30p- :

I owned 100%

Jacy :

There are requirements regarding personal service corporations in this area. I will have to review them and get back to you. The issue is the avoidance of payroll taxes.

JACUSTOMER-88qbq30p- :

ok, should I hold this chat session open?

Jacy :

No, I found what I was looking for. The IRS will asses self-employment tax on the earnings left in the corporation (ie. the K-1 amount).

Jacy :

To sum up, you will owe income tax and most likely self-employment tax on the undistributed earnings from 2008. Sorry for the bad news.

JACUSTOMER-88qbq30p- :

under my personal account

JACUSTOMER-88qbq30p- :

I file the 1120 s and then an amended 1004 personal

JACUSTOMER-88qbq30p- :

1040

Jacy :

Yes, the income is reported on your individual tax return. First, complete the 1120S and the K-1, then prepare the 1040X.

JACUSTOMER-88qbq30p- :

doesn't sound like being an s corp was a benefit

Jacy :

Actually, the main benefit is to avoid double taxation is you had a C corp. C corp's pay tax. Then the shareholder pays tax on any dividends.

JACUSTOMER-88qbq30p- :

what if I filed a 1120 not as a s corp

Jacy :

Then you would pay corporate tax on the profit, and tax again when you pay out the cash to yourself as a dividend.

JACUSTOMER-88qbq30p- :

that seems like it would be more 15% on the corporate side and the normal individual rate

JACUSTOMER-88qbq30p- :

seems like I'm going to get hit pretty hard with interest and penalties

Jacy :

Corporate tax rate for a personal service corp is 35%

JACUSTOMER-88qbq30p- :

I'll stick with the S corp and pay what i need on my amended return

Jacy :

Unfortunately, yes. After you file, the IRS will send you a bill. You can request an abatement of penalties if you can convince them you had a good reason for paying late.

JACUSTOMER-88qbq30p- :

just "stupidity" and don't think they'll accept that

Jacy :

Probably not.

JACUSTOMER-88qbq30p- :

thanks, XXXXX XXXXX my medicine.

Jacy
Jacy, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 568
Experience: Nine years individual income tax preparation and consulting
Verified
Jacy and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Jacy Your Own Question
Jacy
Jacy
Jacy, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 568
568 Satisfied Customers
Experience: Nine years individual income tax preparation and consulting

Jacy 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:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

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

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
How much is UK Corporation Tax on foreign dividends received
Hi Tony,How much is UK Corporation Tax on foreign dividends received from Honk Kong subsidiary?The recipient of such dividends is UK based Limited company. Are these foreign dividends exempt for a "sm… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,466 satisfied customers
Impact of tax changes on filing amended returns... Client
Impact of tax changes on filing amended returns... Client filed a 2016 tax return on time in 2017. If the tax laws change significantly, which laws apply when amended returns are filed... the tax laws… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,466 satisfied customers
SKAT the Danish tax people withdrew 27% of my dividend each
SKAT the Danish tax people withdrew 27% of my dividend each year since 2011. They are willing to refund it down to 15% but I would still eventually pay US tax on that 15% as I withdrew money from my r… read more
abci168
abci168
Principal
27 satisfied customers
Filed W1040 for self-employment. Should I file amended return for HSH?
I was self-employed last year and I filed a W1040 tax form. Everything went through well. I did it through an H&R computer program. Currently I am in need of financial aid as I am going to college. I … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
What does "Distributions Other Than Dividend Distributions"
what does "Distributions Other Than Dividend Distributions" mean on a corporate tax return? Was the amount listed actually giving to the shareholder? … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
727 satisfied customers
I'm doing my 2016 individual tax return. I sold my home in
I'm doing my 2016 individual tax return. I sold my home in 2016. I rented rooms in my personal residence (which I sold in 2016) I took depreciation. I understand that I am subject to depreciation reca… read more
Amanda Russell
Amanda Russell
Accounting Tax & Profit Strategist
Master\u0027s Degree
9 satisfied customers
Income from the leasing of cars...is it self employment
Income from the leasing of cars...is it self employment income? … read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
Adjusted individual tax return for 2014(Iowa),says no
Adjusted individual tax return for 2014(Iowa),says no response to letter of inquiry,disallowed health insurance. deduction.says my wife and I owe$600.00.she called # and was told to show proof of insu… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Can a taxpayer file an amended return to elect into the
Can a taxpayer file an amended return to elect into the installment method if the original return was filed error without the installment method.… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
What tax form is filed to report dividends paid by US Corp?
What tax form is filed to report dividends paid by a US Corp which is owned by a Canadian Corp? I think it might be 1042S. I want to know the rate of WH.… read more
abci168
abci168
Principal
27 satisfied customers
I am preparing a corporate tax return. The company is a
I am preparing a corporate tax return. The company is a payroll company based in NJ but almost all of the clients are in NYC. Is the income generated from NY clients require a NY S corporate tax retur… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Same question on the taxation of interest and dividends (on
Same question on the taxation of interest and dividends (on mutual funds) earned inside a disclaimed portion trust ... disclaimer trust . The original owner of a trust passed and the spouse declined a… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
FEDERAL INCOME TAX: A SINGLE WOMAN RECEIVES A 2016 FORM W-2
FEDERAL INCOME TAX: A SINGLE WOMAN RECEIVES A 2016 FORM W-2 FROM HER EMPLOYER WITH A TYPO IN THE SOCIAL SECURITY NUMBER. TO DATE THE EMPLOYER HAS NOT PROVIDED A "CORRECTED" FORM W-2. IS THERE AN IRS "… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
International attorney that can help with double Taxation
International attorney that can help with double Taxation treaty between US and Germany. A US Green card holder in the year 2014 worked in Germany more than 183 days as a doctor, but less than 330 day… read more
taxmanrog
taxmanrog
Master\u0027s Degree
698 satisfied customers
If someone who is self -employed makes $100,000 net income
if someone who is self -employed makes $100,000 net income in NYC how much % age approximately goes in taxes ? ( including nys and nyc taxes)… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
Is a tax refund on a decedent's individual tax return
is a tax refund on a decedent's individual tax return includible in the decedent's estate (Form 706) AND/OR the decedent's estate income tax return (Form 1041)? … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
727 satisfied customers
A PERSON HAS A NET INCOME FROM SELF EMPLOYMENT OF $16,000
A PERSON HAS A NET INCOME FROM SELF EMPLOYMENT OF $16,000 BUT TAXABLE INCOME OF $0, CAN HE STILL CLAIM EIC HE IS MARRIED AND HAS AN 8 YEAR OLD DEPENDENT.… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Can amended returns be filed for an individual or person who
Can amended returns be filed for an individual or person who is currently deceased using 1040X? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 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