How to pay a solo owner of an S-corp in Turbo Tax? (Director? Employee?)

[MauryM]

Every year I follow the guide, and every year Turbotax gives me a warning at the end that I did it wrong and that I need to put my salary as a director and not an employee.

I'm claiming the income, so not too worried, but have no clue about the proper way to enter it in Turbotax.  I always have to go into forms to change it to be correct.  I keep thinking Turbotax will fix it the next year, but they never do.

[dsoile]

Hello MauryM

Our apologies for the confusion. Since, you are an officer, thus for S-Corp purposes on the software, you will enter your salary under the officers section and not the employees section. The employees section will be for employees and shareholders that are not officers. I hope this helps

[MauryM]

Interesting... I've never seen the officers questionnaire.  I wonder how to get there.  I enter things in the W2 sections as I'm entering W2s which automatically puts me as an employee.

I think there is something wrong with the interview process because it's 3 years running now and I don't recall seeing a question about being an officer.  (Or perhaps I'm doing it right and it's being overwritten by my W2.  Seems like many years it shows I'm making 2x the salary I do until I go back and delete my entries from the questionnaire.)

A few tooltips on the questionnaire would really help in this regard in the software.  I know others have had this issue as well.

[dsoile]

Hello MauryM

On TurboTax business desktop )if you are using the TurboTax business desktop version), when you click the salaries and wages paid tab, you will enter officer salary in the Officers (>2% ownership) section. If your business had employees, and you paid employees, make sure you note that in the about your business section (you will be asked if you paid any employees and/or contractors during the tax year). If that is not the case, then when you go to the salaries and wages paid tab, you will only be able to enter salaries and wages in the following sections: 1) Officers (>2% ownership), 2) Officers (<2% ownership), & 3) Shareholders (>2% ownership)

[KimberW]

To add a couple of screenshots (taken from TurboTax Business Desktop 2023) to dsoile's answer above:

When you are answering the initial questions in the About Your Business section, there will be one that asks if you paid shareholders, employees, or contractors of the business. Answer Yes and then turn on the appropriate checkboxes. You, in this case, are considered a shareholder owning more than 2% of the company. If you also paid other employees, you would check that box, too.

Then, in the Compensation and Benefits section of the Federal Taxes | Deductions tab, you'll see an option for Salaries and wages paid. That leads you to this screen -- the "Explain This" hyperlink provides additional detail about what amounts are entered where:

Continue to fill in the remaining sections of the Compensation and benefits section -- including:

• Retirement plan contributions
• Insurance, health and other benefits
• Payroll taxes

The final spot that asks about officers and other employees is when you are entering Electronic Filing Information, just before finalizing your return. I've filled this screen out as if there were one officer and two other "regular" employees. The total of those two boxes should equal the number of W-2s that your company issued.

[MauryM]

Interesting, so on the section where I usually enter W2 info (because my company sends me a W2 as the only employee/director/shareholder)  Would I just ignore entering that info in that section?

I mean, if I have a W2 it makes sense you enter it when it asks for info about W2s...

I think this is what causes so many people so much confusion.

Thank you for the clarification though, I'll give that a shot next year.

[VolvoGirl]

Are you asking about the 1120 S business return or entering the W2 into your personal return?  Are you preparing the S corp return?  Or who is giving you the W2?  

[KimberW]

@MauryM Can you upload a screenshot of the "section where [you] usually enter W-2 information"?

Or -- clarify whether you are asking about where to enter information when you are preparing the 1120-S form for your company or your 1040 form as an individual?

The 1120-S screens are what I provided screenshots of above.

But, if you were asking about where to enter information on your personal 1040 return -- then you would enter the W-2 from your company in the same place that you enter any other W-2s that you or your spouse received. You would also enter the K-1 from your company as income in its section. [The W-2 is the compensation paid to you as a employee of your company. The K-1 represents your share of profits or losses as the owner of your company.]