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Business & farm
Yes, you should issue a W-2 to yourself from the S corporation and note that you also need to pay FICA (and withholding if applicable). Also, the W-2 needs to be sent to the IRS (along with the transmittal Form W-3). The withholding for federal income tax on the W-2 is treated as having been withheld equally throughout the tax year.
You should actually consult with a local tax professional for this matter. For one thing, you need to ensure that $40k is a reasonable salary for your particular position and type of business.
Just for your information, the salary the S corporation pays you is deductible by the S corporation; it is deducted on your 1120-S and appears on your W-2 but does not appear on your K-1.
‎December 6, 2023
1:12 PM
2,516 Views