Thanks for the answer. Forgive me as I am new at this and the whole question was for the point of learning. This response educated me on the difference of income and distributions but I still have questions regarding my specific situation, or perhaps I didn't give enough info in my original question.
I know one is technically not "suppose" to do it this way but she uses her business checking/debit card for both business AND personal purchases. She does not physically pay herself with a paycheck. When her accountant did her 2015 business taxes he (I assume) took the value of those "personal expenses" and entered that as a shareholders distribution for her. Being that you stated that a shareholder distribution is not income, the way it was filed, is it taxable (all possible evasion issues set aside for the moment)?
Let me backup even further with some added information and questions. Her 2015 business taxes were filed as explained earlier. Our personal returns were done by a different accountant but has errors and needs to be amended. The errors included it being a single return for myself with a status of married filing separately and 2 of our dependents not included. I am trying to amend that with TurboTax and completed everything else that needed to be changed correctly but don't know how or where to include (if it even has to be included) her "income/distribution" as it was earlier described. To restate it, she didn't physically take a paycheck and all personal expenses from the business was listed under "shareholder distribution" in the business returns.
So... does this need to be included in the amended returns?
Where/what form do I include it on if it does need to be included?
And is it "technically" considered return of capital and not income, hence not taxable?
