Hello,
We own a business in which my partner actively works and serves as its president, for which wages/withholding is reported on W-2s. Withholding aligns with IRS and VA guidelines for 0 withholding allowances. The business generates a K-1 statement which reflects the end-of-year shareholder's portion of the financial results.
Each year, we are charged penalties for under withholding throughout the year, although proper withholding is performed on our W-2 wages. How do I show the distribution of income such that any results form the K-1 are allocated to the end of the year and excluded from the withholding calculations throughout the year? Seemingly, the penalty is assessed as if the K-1 income were earned throughout the year, when in effect, it is only at the end of the year after the business tax return is completed for filing during the next year. I believe the penalty is miscalculated and we are being overcharged.
Thanks in advance for any assistance!
