First Time LLC with S-Corp Election

[charluzze]

Yay! 

I'm a self-proprietor LLC, with no employees, recently granted the election to file as an S-corp. So now I can divide my income into a "Salary" amount and a "Dividend" amount. I use TTAX "Home and Business". Where do enter my "salary" portion and where do I enter my "dividends" portion? Or do I absolutely need to use TTAX "Self-Employed", instead? Thanks!

[ThomasM125 · Accepted solution]

If you are an S corporation, you need to file an S corporation tax return using the Business TurboTax product.  In that product you will be prompted to enter officer salaries and distributions to shareholders. You can't use the Self-Employed or Home and Business TurboTax products to prepare an S corporation tax return.

You will generate a schedule K-1 when you prepare the S corporation tax return that you will then use to enter the corporate income on your individual tax return.

TurboTax Business Software

[Mike9241]

not only do you report a salary on the S-Corp return but you are also responsible for filing with the Social Security Adm  forms w-2 and w-3. With the IRS.  quarterly 941's where you report your wages, withholding and payroll taxes(FICA and Medicare, form 940 at year-end where you report the portion of your wages taxable for federal UC purposes, most states also require quarterly filing on state withholding forms, if your state has an income tax, and quarterly unemployment compensation returns 

if you have not done this, seek out a tax pro. there could be significant penalties for failure to file and failure to timely pay in taxes. 

[charluzze]

Thanks, but kind of impossible to do because I requested permission to file for 2021 as an S-Corp and the IRS took 11 months to reply with permission. So during 2021 I paid estimated taxes (1040-ES) as a single-member LLC like I have done for years; I had no reason or opportunity to file a W2 or make FICA payments, etc. So I'm assuming they'll accept my S-Corp return without any W2 information, etc. Do you know otherwise?

[AliciaP1]

Once you request to be treated as an S-Corp you should have started "acting" like an S-Corp.  This means 50% of all the money you paid yourself out of the S-Corp should have been reported as payroll.  If your election date approved is not until 2022, you should not file as an S-Corp for 2021.

If you were approved with an election date in 2021 and you did not report your payroll correctly, you need to file the forms required and report the payroll now and accept the penalties.  This will then give you the correct information to file your Form 1120-S for 2021 and use the K-1 to properly report the pass-through income to your personal return.  To do this, you will likely need to file an extension for your personal tax return.

@charluzze