S corp - 1120s - line 8 - Salaries and wages - which box of W2

[karthikarun]

Hi, I am a S-Corp owner. I am both the employer and single employee of the S-Corp. I pay myself a salary for which a W2 is issued. 

When filing my Business tax return for my S-Corp, form 1120S has the following line:

8 Salaries and wages (less employment credits) . . . . . . . . . . . . . . . . . 8

Here is my question:

For the consideration of "Salaries and wages", which box from my W2 should be considered? Would it be "Box 1" or would it be "Box 3"? 

It seems to me that "Box 3" should be the one considered here, since it reflects the "Total salary" paid to the employee by employer, whereas "Box 1" reflects various other considerations like 401K contribution by the employee etc. (which shouldn't impact how much salary the employer pays to the employee). 

Or Would it be something else?

Could you please clarify? Thanks. 

[AliciaP1]

The correct amount to claim depends on if you had pre-tax deductions or not.  The best definition of salary in your case is "gross annual salary plus the value of taxable fringe benefits less any employment credits claimed".  Also, as the sole owner and officer of the S-Corp, you report your salary on line 7, not line 8.

See Form 1120-S for more detailed instructions for Line 7 and Line 8 of the form.

[karthikarun]

Thanks for the feedback. Appreciate it. 

> The correct amount to claim depends on if you had pre-tax deductions or not

When you say "pre-tax deductions" are we referring to "401K elective deferrals done as an employee"? Or Are you referring to any "pre-tax deductions" as an employer?

> "gross annual salary plus the value of taxable fringe benefits less any employment credits claimed"

"Gross annual salary" is clear to me. But not sure what you mean by "employment credits".

Regardless, just for simplification purposes, which box of W2 would best represent the "Gross annual salary"? Or From searching online I see that the "Gross earnings" in the employee's very last pay stub for the year gives this amount. I hope my understanding is right on that. 

Thanks.

[AliciaP1]

Yes, pre-tax deductions for the benefit of the employee are very commonly health insurance premiums or 401k elective deferrals to a qualified employer-sponsored plan. If you use your tax return to calculate and invest your 401k contribution at year-end, this doesn't apply.  So, the representative number on your W2 would be box 1.

The employment credits are the credits related to Covid employers can qualify for if they had any qualifying situations.  See Coronavirus Relief Center for more information about the credits.

[Mike9241]

in the simplest situation, say you took $100K salary of which $24K went into a 401K so $100K for box 7. but as for the w-2 it could be box 3 or 5 (more complicated situations where certain items add to medicare wage reporting) 

the IRS simply says line 7/8 should be 

Enter on line 7 the total compensation of
all officers paid or incurred in the trade or
business activities of the corporation. The
corporation determines who is an officer
under the laws of the state where it is
incorporated.
Enter on line 8 the total salaries and
wages paid or incurred to employees
(other than officers) during the tax year