If a 100% fully participating S corp owner fails to pay himself any salary, but takes approx. $20,000 of distributions and reports net income of $15,000, is it possible to pay the S/E taxes on the distributions as though they were salary? If so, what is the correct presentation on form 1120S, Schedule K-1, and/or form 1040? Thanks in advance for any replies.
USA Can S corp owner pay S/E taxes when filing form 1040?
- Thread starter matman
- Start date
S Corporations need to pay reasonable wages and also file form 941s at least quarterly (depending on tax liability amount). There's probably some way to go back and reclassify the $20,000 as wages, but there will be penalties. I recommend he/she hire an accountant to help them sort out their problems and file their tax forms correctly. Also do it quick because the 1120S deadline is only a few weeks away.