Ashwin let's summarize what Critter #2 is saying here:
- An LLC that has elected to be taxed as an S corporation is a pass-through entity. These entities, in general, do not pay tax at the entity level.
- All earnings of the S corp will be reported out to you as a shareholder via a Schedule K-1. You will use the information on the Schedule K-1 to input onto your personal tax return; form 1040 Sch E.
- Additionally, any wages paid to you from the S corporation will be reported to you on form W-2. This will also be reported on your personal 1040.
- You as the shareholder will pay tax on ALL the income of the S corporation at the personal level. This is true regardless of whether it is paid out in the form of a distribution.
- Since you the shareholder will be reporting all the income, you the shareholder need to project out what you believe this income will be and you the shareholder will need to make estimated tax payments to the IRS. You will do this via the 1040-ES or you can pay them online.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
