Do I have to enter K1 and W2 if from the same LLC partnership/business? There is an overlap in income on W2 and K1 and TT is seeing them as two different income sources

[jcastrillo1]

So if there is 2 partners in a LLC they don’t need a W-2 only Schedule K-1 to report their individual income?

[AmeliesUncle]

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@jcastrillo1 wrote:

So if there is 2 partners in a LLC they don’t need a W-2 only Schedule K-1 to report their individual income?

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Correct, Partners do NOT receive a W-2.

[Sarah1168]

The IRS is penalizing me (Charge 549) for "failure to file forms W-2". It's my understanding that an S-Corp only needs K-1 if there are no employees and only 2 equal shareholders.  This is also for a company that closed and made no money that year, therefore was a final return.  

Am I correct that filing a final 1120S without W-2 is ok?

Thank you!

[AmeliesUncle]

The shareholders ARE employees, so the corporation did have two employees.

Did you report anything on Line 7 or 8 of the 1120-S?

[Mike9241]

if there is an amount on line 7 or 8 consult a tax pro ASAP. you have a substantial tax issue that's going to require the services of a pro. 

[Sarah1168]

No I did not.  The corp did not operate in 2018.

[Max57A]

What if a company   k1 form shows a W2 yet never paid the wages? 

[AmeliesUncle]

A K-1 does not show a W-2.  Can you clarify what you mean?

[wheelman666]

YEs your tax guy definitely did something wrong.

the W2 and the K1 are totally different types of income.

the W2 shows what you were paid via Paycheck, what you paid in taxes, 401K contributions etc.

the K1 shows the company gain or loss that as an S corp will pass through to your taxes and will adjust your overall income, up or down.

Yeah something is seriously wrong

[PennyWiggles]

TaxGuyBill

So if I understand correctly...if I have 2% ownership in a LLC and also work full time on a monthly salary, are you saying the salary should be W2?  In the past all employee/owners get a K1 that has had the business tax credits deducted out of each owners K1  example:  if you were paid 50k and your 2% of the tax deduction is 1k then your K1 will show 49k and it is up to the owner/employee to pay taxes as a K1.  I always felt that if your working as an employee that they should all be paid W2.

[AmeliesUncle]

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@PennyWiggles wrote:

if I have 2% ownership in a LLC 

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How is the LLC taxed?  Partnership?  C-corporation?  S-corporation?  Something else?

Partners of a Partnership don't get W-2s because that is incorporated on the Partnership K-1 (usually box 4 as Guaranteed Payments).  Employee/shareholders of a corporation receive wages/salary that are reported on a W-2.