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How to properly file schedule k-1 1120s as a business

I own a small business s-corp with my partner, 50/50.  We have not yet begun paying ourselves as employees since we don't make that much money yet.  Obviously, we've filed our business taxes and each have our schedule k-1s but since we do a lot of work for the corporation can we file our personal taxes as self-employed and claim any business expenses that way to lower our tax liability?  I just don't know if that is going to cause a problem.  For example, if the business show operation income for me in box 1 of schedule k-1 as $10,000, that technically counts as income for me personally; but since I did do work for the business but couldn't afford to pay myself, can I file as self employed? 

2 Replies
Level 5

How to properly file schedule k-1 1120s as a business

if you work for the s corp you are an employee and also a shareholder. you are not self employed and can't file as self employed on SCH C. the corporation files a return and deducts expenses not you personally.

Not applicable

How to properly file schedule k-1 1120s as a business

nor are can you claim any employee expenses because they have been eliminated for 2018.  as to salary, you do realize that if taken it is deductible by the corp and is W-2 income to the recipient. dso if each take the same it's virtually a wash as to your taxable income.     also if the S-Corp paid your and/or the other shareholder's health insurance, it's not deductible by either the taxpayer or the corp, because it wasn't on a W-2.  if you/other shareholder  pay your health insurance personally, it is only deductible as an medical expense on schedule A 

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