I made an S-corp election last year, filed my business taxes online with turbo tax, and received my K-1 form.
Now I am filing my personal income taxes and finding after inputting all K-1 info it is using the "Ordinary Business Income" and not the W-2 wages. Questions:
1) Will the tax return only reflect the Ordinary Business Income or will also show the W-2 wages?
2) The amount that should be owner distribution is under Part III, Box D.
Or Shareholder and Debt Basis Limitations, Part I: Shareholder Stock Basis, Line 6 Distributions (excluding dividend distributions).
Is this correct? Will it not appear on my personal income tax filing as income?
Thanks
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@DoDesign wrote:1) Will the tax return only reflect the Ordinary Business Income or will also show the W-2 wages?
You need to enter the information from your W-2 separately. Your K-1 does not reflect the W-2 salary/wages paid to you by your corporation. In other words, the W-2 figures are not included in your K-1.
Did you not receive a W-2? Who prepared your 1120-S?
@DoDesign wrote:2) The amount that should be owner distribution is under Part III, Box D.
Yes, Part III on Line 16 with a "D" code is where a distribution should appear.
The distribution is not taxable unless all or part of it exceeds your basis in the corporation (unlikely scenario). It does, however, reduce the basis of your shares in the corporation.
I'll page @Rick19744 for further input.
A few more comments:
HI Rick19744 ,
Thank you for your input. I would like to clarify and reply to a couple of items:
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