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After 20 years as a sole proprietor I converted my business

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to a Sub S corporation...
After 20 years as a sole proprietor I converted my business to a Sub S corporation last year. However I continued paying myself as I had done in the past without withholding taxes, instead paying estimated taxes on a quarterly basis. Time came to do the tax return, which my wife takes care of. Then came the check from the IRS and it was huge! Surprised, I began to investigate the return and found that no self-employment taxes had been paid. I have since learned that Sub S corporations don't do it that way. More fool me, but now I want to set things right. How do I proceed to pay those taxes, and what penalty (ies) should I expect to pay? (for calendar year 2014)
Submitted: 2 years ago.Category: Tax
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Answered in 1 minute by:
11/3/2015
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,272
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi,

...

I can help here ... let me read your question

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

Ok, what's you'll need to do is amend your 1120-S (and the resulting 1040) for 2014.

...

the fica (1/2 of SS * Medicare- employee side) should have been withheld and paid-in by the s-Corp from your salary, and then the S-Corp itself pays-in the employer half.

...

So you'll re-do the 1120-S with those changes, give yourself a W-2 showing the SS&Medicare withheld from the salary portion of your income (no SS & Medicare on the K-1 profits over and above salary) then redo the 1040 with those changes reflected.

...

That will then allow you to ise the 1040X (amended personal return) and the amended 1120-S and send in (together as one package)

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

And once you know the numbers you can go here to pay in what needs to be paid in to reconcile: https://www.irs.gov/Payments

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

Please let me know what questions you have from here.

...

Lane

.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

LHi,

...

I'm just checking back in to see if my answer helped.

...

If so, I'd appreciate a positive rating, using the stars on your screen. (That's the only way I'm credited for my time and expertise)

...

But if you need more on this ... Let me know

...

Thank you,

Lane

.

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,272
13,272 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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