Sch Cs who took Salary but didn't file S-Elections

Forum|Forum|3 years ago
March 7, 2023
3 replies
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My client was a Sch C in 2021, we advised them to form an LLC and file an S-Election. They began taking a salary but never completed the formation or S-Election. How should I handle this on the 2022 return?

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rbynaker

Level 13

Undo all of the payroll and hope payroll tax refunds come quickly? One cannot employ oneself. If they had formed the LLC you would likely qualify for a late S election but if they didn't form a separate entity they are just a self-employed Sch C filer.

sjrcpa

Level 15

And if they can't follow the original instructions you gave them, they aren't going to be able to keep corporate books and records for an S Corp return so I think I'd drop that idea.

My two cents.

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