Anonymous
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I paid estimated taxes using under my SSN from my business account.This was a mistake.My company is S corp. How do I handle these deductions on 1120S? Or personal taxes?
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June 6, 2019
6:33 AM
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Business & farm
Your S-Corp made a distribution to you. On the books of the S-Corp it's recorded as a reduction of cash and a reduction of your capital account. That will flow through the Schedule K-1 to you.
On your books you account for the cash paid to the IRS as a payment of estimated taxes and a reduction of your basis in the S-Corp.
In your income taxes you'll simply report that payment as a regularly-scheduled estimated tax payments, as that's all it was.
Tom Young
June 6, 2019
6:33 AM
Anonymous
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Business & farm
Thanks for the response. This is very helpful! To clarify, I should deduct the amount on Line 12 Taxes and Licenses on 1120s and again on my 1040 personal return on Estimated Tax Payments for 2017?
June 6, 2019
6:33 AM
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Business & farm
" I should deduct the amount on Line 12 Taxes and Licenses on 1120s and again on my 1040 personal return on Estimated Tax Payments for 2017?"
NO.
Cash passed out of a S-Corp to a shareholder is almost never an EXPENSE to the S-Corp, unless it's compensation reported on a W-2. Instead, it's a DISTRIBUTION to the shareholder, reducing the shareholder's capital account on the books of the S-Corp. If you want to "reimburse" the S-Corp for the cash distribution you can and your capital account (and your basis in the S-Corp) will be unchanged.
The point is that the cash paid erroneously out of the S-Corp's checking account shouldn't reduce the S-Corp's profitability. The S-Corp didn't "really" pay the taxes, you did, and that cash just happened to come from the S-Corp. From the S-Corp's standpoint the transaction DOESN'T flow through the P&L; that means it has to flow through the balance sheet.
NO.
Cash passed out of a S-Corp to a shareholder is almost never an EXPENSE to the S-Corp, unless it's compensation reported on a W-2. Instead, it's a DISTRIBUTION to the shareholder, reducing the shareholder's capital account on the books of the S-Corp. If you want to "reimburse" the S-Corp for the cash distribution you can and your capital account (and your basis in the S-Corp) will be unchanged.
The point is that the cash paid erroneously out of the S-Corp's checking account shouldn't reduce the S-Corp's profitability. The S-Corp didn't "really" pay the taxes, you did, and that cash just happened to come from the S-Corp. From the S-Corp's standpoint the transaction DOESN'T flow through the P&L; that means it has to flow through the balance sheet.
June 6, 2019
6:33 AM
1,391 Views