Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

I am a 50% shareholder in a n s-corp. I also run the

Customer Question
Hi, I am a...

Hi, I am a 50% shareholder in a n s-corp. I also run the business as pay myself via w-2. last year i also took $20k in owners draws. I am completing my personal taxes now and am wondering if i can list these draws a qualified dividends?

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

I dont think so

Submitted: 3 months ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 2 minutes by:
4/3/2018
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 3 months ago
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,087
Experience: 35 years tax experience, including four years at a Big 4 firm.
Verified

Hi from Just Answer. I'mCustomer and can assist.

Ask Your Own Tax Question
Customer reply replied 3 months ago
Great!
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 3 months ago

Since you pay tax on your share of S corp income anyway, s corps typically don't pay dividends. You pay tax on the s corp income, and your distributions are payments from that taxed income.

Dividends are a problem for s corps, and are generally avoided. dividends can be paid from an s corp, but only if it was a previous C corp.

Let's say you received a $30,000 wage from your S, and your share of its income was $33000. And you took distributions of $20k. You pay tax on $30k in wages, and $33K in S profits. The $20K paid as draws is a distribution from the $33k income. There is no additional tax on the $20K.

I hope that helps. Positive feedback, five stars being best, ***** ***** I'mCustomer

Ask Your Own Tax Question
Customer reply replied 3 months ago
That is very helpful. It has never been explained like that to me before.I understand your point, but I have already taken the draws. So, when completing the 1120-s for the business, on the schedule k for lines 5 a and b (ordinary and qualified dividends), am I able to put the $20k draw as qualified?
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 3 months ago

The draws are not taxable. Period.
Do NOT try to classify them as dividends. As long as you did not withdraw more than your investment, the draws are NOT taxed.

I can offer a phone conference to discuss further if you like. See my offer.

Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask PDtax Your Own Question
PDtax
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,087
5,087 Satisfied Customers
Experience: 35 years tax experience, including four years at a Big 4 firm.

PDtax 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

1,338 satisfied customers

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

Richard

Richard

Tax Attorney

4,512 satisfied customers

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

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

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

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 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.

< Previous | Next >

Related Tax Questions
Lane - Can you run this scenario for me using your section
Hi Lane - Can you run this scenario for me using your section 199A model that you have. Here are the factors:S Corp Engineering Firm so a non service relatedW-2 Employees of $1,728,000 ($701,000 of W-… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
If you are a single member S-Corp and taxable income is over
If you are a single member S-Corp and taxable income is over $315K and business is a service industry so would not get the 20% deduction under new tax reform, would changing to a C-Corp help pay less … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I started an LLC in Texas in October 2015. purposes, that
I started an LLC in Texas in October 2015. For tax purposes, that business has operated as a one-owner LLC (sole proprietor in reality) and I will included that business income on my 2015 personal inc… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I have a quick question -Corporation. Is it mandatory S-Corp
I have a quick question for S-Corporation. Is it mandatory for an S-Corp to pay W2 to the owner (when there are no other employees?) In other word, I have an S-Corp and I am the owner.... What will be… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
What are the tax consequences when one of the owners has been
What are the tax consequences when one of the owners has been taking a draw from the business and then quits the business before it's become profitable.… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
Im wondering what the difference is between an owner of a corporation
im wondering what the difference is between an owner of a corporation and a governing person and if they both get issued w2's… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
This question is in regard to owner compensation LLC
This question is in regard to owner compensation for an LLC taxes as an S-Corp. The company is owned 50-50 husband and wife in AL. Let's say the husband runs the business and the wife is more like a l… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have a single-member LLC that I am going to elect S-Corp
I have a single-member LLC that I am going to elect S-Corp status on for 2014. Right now on my books my equity accounts are as follows... Owner's Draw - $0 (closed out every year to Owner's Equity) Ow… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I am preparing a subchapter S corporation Tax return with two
I am preparing a subchapter S corporation Tax return with two owners. they each have a stock account of 5,000. They also took draws for 20K during the year that are reflected in their equity accounts … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Question for NPVAdvisor . They say An S Corporation can have
Question for NPVAdvisor . They say An S Corporation can have only one class of stock, all outstanding shares of the corporation's stock confer identical rights to distribution and liquidation proceeds… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Your question: "I am doing my own taxes in Business Turbo Tax.
Your question: "I am doing my own taxes in Business Turbo Tax. My husband and I are 50/50 shareholders of the s-corp. We both receive salaries via w-2 and take partner draws. FORM 1120S- LINE 7- Do I … read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
Dear Tax Advisor, If a C-Corporation that have one foreign
Dear Tax Advisor, If a C-Corporation that have one foreign shareholder who owns 50% of total shares, and he is also the officer of the C-Corp. By filing business tax return purpose (Form 1120), does t… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
can i report draws from my c corp as dividends instead of
can i report draws from my c corp as dividends instead of salary? also would it be a qualified dividend? Totally making this up as I go along...I WILL hire a CPA from on, promise.… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
My client was advised to incorporate her existing restaurant
My client was advised to incorporate her existing restaurant business, which is a sole proprietor located in California. The date of incorporation with the California Secretary of State is May 7, 2009… read more
PDtax
PDtax
Certified Public Accountant (CPA)
Master's Degree
5,087 satisfied customers
I currently own an S-Corporation. I was wondering if my wife
I currently own an S-Corporation. I was wondering if my wife can set up a seperate LLC and we can hire her company as a consultant vs making her an employee. I was thinking about doing this so that sh… read more
Jon Andrews
Jon Andrews
CPA
2,926 satisfied customers
I am co-owner owner of a small S corporation that provides
I am co-owner owner of a small S corporation that provides evaluation for veterans. I also work full time as a Director at a small Non profit Associtation. My question is .... do I have to file busine… read more
Merlo
Merlo
Tax Consultant
558 satisfied customers
Can overlooked Sub S Corp wages be added to 1040 Line12
Already filed corporate returns for 2008 (single stockholder of small Sub S Corp) showing w-3 / w-2 wages of $56,000 …….and now doing individual returns and realized there was additional $4,000 to be … read more
Ed Johnson
Ed Johnson
Senior HR Consultant and Business Devlpm
Bachelor's Degree
6,994 satisfied customers
Im just trying to get a basic picture of my tax liability.
I'm just trying to get a basic picture of my tax liability. I am a new business owner. 2008 was my first full year in business. My company is set up as an S-Corp. I did not pay any payroll taxes to my… read more
Ed Johnson
Ed Johnson
Senior HR Consultant and Business Devlpm
Bachelor's Degree
6,994 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