ThomasM125
Expert Alumni

Business & farm

You would need to pay yourself a "reasonable" salary since you are being taxed as a corporation. A starting point for this is to determine how much money you took out of the business as compensation. The IRS would likely consider this as wages. You should file forms 941 to report your salary each quarter and pay in your payroll taxes.

 

You do not need to consider all business income as wages, just a reasonable amount, based largely on what you take out of the business.

 

A schedule C, or regular corporation, you would have the same payroll requirements. The main difference is that distributions to you from a C corporation would be taxed as dividends.

 

You would have to send a letter to the IRS to revoke your S corporation status. 

 

Since you haven't paid in salary all year, you may be able to employ a work-around by issuing yourself a form 1099-MISC, reporting your salary as sub-contract pay. At least that way you can pay in your self-employment (FICA) tax. You would deduct the amount on your corporate tax return, then report it as self-employment income on your personal tax return.

 

I would not recommend you do that going forward, however.

 

I hope this has been helpful!

 

 

 

 

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