Can an S Corporation file schedule C?

[jasonrobertestes]

I was recently told that my S Corp could be treated as a sole proprietor since I am the sole owner/employee. Is this true?

[Fern · Accepted solution]

An S Corp must file an 1120 S tax return. The rules for an S Corp are different than the rules for a Single Member LLC.If your business is considered an S Corp, you need to follow the S Corp rules.

The S Corp must file a tax return, an 1120 S.  Income and expense items are distributed to the owners of the S Corp via a Schedule K-1. You include the Schedule K-1 in your personal tax return.  Schedule K-1 is not reported on a Schedule C. You can use Turbo Tax Premier to include K-1 information.

To complete an 1120 S, you need to use Turbo Tax Business. This is a separate program from the programs used to prepare an individual tax return.

A single member LLC is a disregarded organization by the IRS.  This means that all income and expenses get reported on Schedule C of your individual tax return. When using Turbo Tax, use either Turbo Tax Self Employed (online) or Turbo Tax Home and Business (desktop software).

[Anonymous]

Accountant listed officers comp on 1120s line 7 and then on schedule C line 1 as gross sales.  Then taxed as SE income.  Is this a mistake?

[Carl]

What are you asking this question? Do you have a sole proprietorship or single member LLC that owns or has an ownership interest in an S-Corp?

Under no circumstances and with no exceptions will an S-Corp ever file a SCH C. The SCH C is for a sole proprietorship or single member LLC, which are considered disregarded entities by the IRS.

A S-Corp is considered to be a non-living, non-breathing separately taxable entity that must file it's own physically separate 1120-S Corporate tax return.

Did you register your business as an S-Corp? (No - you file SCH C. Yes - you file 1120-S)

Did you register your business as an LLC and then file IRS Form 2553 with the IRS so they will treat your LLC "like an S-Corp" for tax purposes only? (No - you file SCH C. Yes - you file 1120-S)

[Anonymous]

in other words, no W-2 was issued nor [payroll tax returns filed which could lead to a host of penalties. reporting on schedule C could lead to another host of penalties.  not only could the IRS come after you and the corp but also the State for failure to file and pay Unemployment compensation taxes. 

Breaking the Law! – Revenue Ruling 74-44; IRC §3121(d) specifically states than an officer of a corporation is considered an employee “subject to payroll taxes on remuneration paid to services performed.” Also, the Tax Court Case Sean LTD. versus Commissioner (Summary Opinion 2013-62) states that a salary cannot be in the form of shareholder distributions or 1099-MISC payments.

note that line 7 of return is for officer comp so its likely the IRS will be looking for a w-2

also consider the IRS has at least years to catch this and penalties and interest are accruing every day. repeated failure to properly report could give the irs 6 years.  if it catches this it may audit those returns and if you don't have support for any expense it audits, it can get thrown out. 

[tagteam]

S-Corp Owners Compensation (intuit.com)

Solved: Self Employed or Employee (intuit.com)

[Critter-3]

@Anonymous    

You have asked this question many times and you keep getting the same answer :  https://ttlc.intuit.com/community/user/viewprofilepage/user-id/2758659