Level 2

S corp: officer had neither w2 nor 1099

Forum|Forum|2 years ago
October 16, 2023
2 replies
17 views

Hello. LLC is an S Corp. the officer of the LLC hasn’t been paid neither through w2 nor 1099.

I am filing 1040 and I put the company profits in schedule SE : adjustments worksheet: part II: non farm income. Otherwise the individuals won’t get a tax refund.

or the better option is to issue 1099 for 2022? I know there will be a penalty. But the AGI is $16,000. So there would be no taxes due.

what is the best option?

S corp

T

TaxGuyBill

Level 15

@Nurcamila wrote:

I am filing 1040 and I put the company profits in schedule SE : adjustments worksheet: part II: non farm income. Otherwise the individuals won’t get a tax refund.

what is the best option?

Why would you put it there? Schedule SE does not apply. Or are you trying to falsely claim the Earned Income Credit???

If the officer/LLC member/client did not receive "compensation" from the corporation, you only enter the K-1. You don't create false information on the 1040.

If the officer/LLC member/client DID receive "compensation" from the corporation, the corporation needs to amend the 1120-S, file late payroll forms (with penalties and interest) and file a late W-2 (with penalties).

N

NurcamilaAuthor

Level 2

Why falsify?

The previous accountant made mistakes:

1. Changed from disregarded entity to c corp ( claiming that the LLCs officer had no ssn). Changed from c corp to s Corp ( After getting ssn)

2. Failure to notify a client about reasonable salary for himself ( filing w2)

everything happened within the first year of operations.

The client’s only earnings are from the business and it is $16000. So, in fact, the family is eligible for child tax credit and earned income tax credit. However, technically they made mistakes to file w2 on time or change the tax regime.

I was searching for the way to claim a credit, I found this way from proseries article: show the earnings from S corp if w2 wasn’t filed in SE adjustments part II, non farm income.

so I was thinking whether it could be a correct way.

I was looking for an advice:

file w2 and then submit 1120s

Or

file 2553 (to change the tax regime to disregarded entity) and file 1040 schedule c

T

TaxGuyBill

Level 15

@Nurcamila wrote:

Why falsify?

The previous accountant made mistakes:

So, in fact, the family is eligible for child tax credit and earned income tax credit.

I was searching for the way to claim a credit, I found this way from proseries article: show the earnings from S corp if w2 wasn’t filed in SE adjustments part II, non farm income.

I was looking for an advice:

file w2 and then submit 1120s Or file 2553 (to change the tax regime to disregarded entity) and file 1040 schedule c

You want to falsify because somebody else made a mistake? REALLY?

As it stands now, no, they don't qualify for the Child Tax Credit or EIC because they don't have any wages/salary or self employment income. But see my prior answer and ask the client if they took "compensation" or not.

That is not a correct way, and I'm horrified that Intuit would even write that.

If this is the first year of being the corporation, they MIGHT be able to "withdraw" that election, but it would need to be done today ... which means I think it is too late. Unless the 8832 to be taxed as a C-corporation was their "initial" election, they can't change again for five years.

BobKamman

Level 15

This is a rather odd question for a "new member" to be asking on October 15. You aren't asking about your own returns by any chance, are you? Who prepared the 1120-S, which was due last month?

You’ve come to an Intuit site supporting tax professionals, and you may be looking for support as an individual taxpayer. Please visit the TurboTax Help site for support.

But we are always willing to try to keep other practitioners out of trouble. Even out of jail. When you come across a radioactive return, best to get as far away from it as possible.

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