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If a shareholder of an S-Corp, 100% shareholder, who did not…

If a shareholder of...

If a shareholder of an S-Corp, 100% shareholder, who did not pay himself a salary in 2016 and owes in excess of 48K when the K-1 comes over to personal tax and all the shareholder's monies are in the S Corporation. What is the best way for the shareholder to pay his or her tax debt?

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10/15/2017
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 6,696
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

S corporation shareholders not paying themselves a salary is a common mistake.

If you cannot pay the entire amount you owe, you can request an Installment Agreement and make monthly payments to the IRS. The IRS is very accommodating with Installment Agreements.

When you file your return, pay as much of the tax liability as you can.

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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Customer reply replied 10 months ago
I know all this information. My question is that their monies are tied up in the S Corporation. The S Corp has the funds to pay the personal taxes that the SCorp's K-1 has generated. How can they access money from the S-Corp to pay their personal as a 100% shareholder?

I have no way of knowing what you do and do not know based on the information in your question.

I will opt out so another expert can assist you.

Thank you.

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Customer reply replied 10 months ago
I did not mean to be offensive, just that was not what I was asking.
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,127
Experience: 35 years tax experience, including four years at a Big 4 firm.
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I'm PDtax, a different expert. I see the first expert has opted out. I can assist.

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Since your shareholder can access S corp funds, they should do so to cover the check. Do not simply pay the IRS with a company check or direct debit.

Your 100% shareholder has the authority to draw funds as they see fit from their S corporation any time. They are paying the income tax on it now, why not use some of that taxed income to pay the taxes?

If this covers things, please rate my answer with positive feedback. Experts are not paid until positive feedback is recorded.

If you need additional help, I am online now.

PDtax

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Customer reply replied 10 months ago
do you think since he failed to take salary and pay payroll taxes as he should it will be safe to take owner draw to pay taxes?

Of course.

I will tell you that I would fix the problem and report a wage, and pay the payroll taxes, on some of the income. Likely saves thousands. Should be worth doing, even now.

PDtax

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Customer reply replied 10 months ago
I am sorry, had a client to come in my office to pick up taxes. So if the 100% shareholder just writes a check to himself as a draw from SCorp for the total he owes in taxes it will just be a normal draw as he would take for anything else?

YES. no tax impact to either the corp or to him.

Please rate only after I have answered all your questions.

PDtax

PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,127
Experience: 35 years tax experience, including four years at a Big 4 firm.
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