I need help with finishing my 2020 taxes.
I was W2 for half of the 2020 year. Got laid off in June 2020. In July 2020, I formed S-Corp. Got IRS S-Corp status, and EIN, etc.
I started doing IT Consulting in Sep 2020 thru the newly formed S-Corp. My wife is a realtor and I asked her to use the same S-Corp for his real estate business to pass thru his brokerage commission.
We have not been drawing real salaries for both me and my wife, just withdrawing the minimum (10K per month) amount to pay mortgage and bills and I haven't been filling quarterly business S-Corp taxes.
I understand by 9/15 I need to file S-Corp tax and by 10/15 I need to file our joint personal taxes 1040.
Can someone help me please what Turbo tax software I need and how to file s-corp taxes by 9/15 to avoid the penalty? Then how do I file my personal tax based on the W2 I had from half of 2020.
Also, could someone also tell me how to save more taxes by pass-thru income from S-Corp? I mean does it help save more taxes by withdrawing a higher amount as a salary per month for me and my wife as an employee of the S-Corp or salary should be kept to the minimum amount to save higher taxes? Which method is the best to save more taxes?
Please give other advice to save taxes.
Use the Business product for the 1120-S for the corp BUT the return is late....should have been filed by 3/15/2021. You can take a reasonable salary from the corp and pass the rest through but the salary has to be reasonable. Please get a tax pro in your location.
consult with a tax pro immediately. the failure of you and your spouse to take a salary for your services to the S-Corp (but see later about the realty business) is a serious tax problem. the IRS could impute salaries that should have been taken and then subject you, your spouse and the S-Corp to significant taxes, penalties and interest for failure to pay salaries, failure to file payroll tax returns, failure to file W-2s, failure to withhold and remit payroll taxes. if you have a state income tax, it too could impose similar penalties. another issue, as employees the S-Corp may be required to carry workers' compensation insurance. if you didn't the state can impose penalties. what your spouse did with his commissions also presents a significant tax issue. if the S-corporation performed the realty business in its name that's ok if state law allows this. some state laws would require both of you to be licensed realtors or there may be other restrictions. if not, then there are tax and legal issues.
by the way, did you file an extension for the S-Corp returns? they were originally due 3/15/2021. if not there's about a $200/month penalty per shareholder for late filing.
both of you need an education about the functioning of an S-Corp and the laws affecting it. you need more help than can be provided by this forum.
Thanks for your reply.
I was going to file taxes by March this year but I had a death in the family and I was not in the mental state to do anything. it took me few months to get normal.
I was withdrawing salary and keeping manual excel but not using any QuickBooks or online payrolls services.
Are you saying I was supposed to file payroll tax on the withdrawn salary every month and then W2 has to be generated for S-Corp employees?
Nope no extension was filed for S-Corp and will pay the penalty for late filing, totally understand.
Are you saying I was supposed to file payroll tax on the withdrawn salary every month and then W2 has to be generated for S-Corp employees? YES ... proper timely payroll reports needed to be filed and W-2/W-3 forms issued in Jan ... you are also late on those forms.
Nope no extension was filed for S-Corp and will pay the penalty for late filing, totally understand. Abatement of the penalties may be allowed if you claim "ignorance" of the rules ... use a local tax pro to get your returns done correctly and minimize your penalties.