S CORP Home Office Reimbursement Plan Question

[larr1952]

Thanks for your response. I appreciate it. The reason for the home office (I know it is a small number) is auto mileage deduction. If a person has a home office the business miles start when the person leaves home not when they get to their first destination. Same with coming home at night. The question is can the company reimburse all expenses EXCEPT home depreciation (company policy?) and not have to add depreciation recapture (allowed versus allowable?) when the home sells. I would really appreciate your help with this issue.

[wdegaude]

LLC had a profitable year. I was renting in SC so I will deduct that payment from the LLC taxes.

I am using part of my home as an office in NY. How do I claim the partial depreciation and partial expenses (RE tax, mortgage interest)? In my personal tax return or the LLC's return?   

One last question, Do I have to file a State Tax Return for NY or SC or Both? How do I apportion between the

2 if filing in both states? 

[GeorgeM777]

Probably on your Schedule C, Profit and Loss From Business.  If you are a single member limited liability company (SMLLC), from a tax perspective (and not a legal perspective, only a tax perspective), the IRS disregards your entity for tax purposes.   By "disregarding your entity," the IRS is essentially saying that a SMLLC will complete a Schedule C, and include all gross receipts and expenses on a Schedule C. 

In TurboTax online, you enter your SMLLC income in the Income & Expense section.  Scroll down the page to Self-Employment, click on the drop-down arrow if necessary, and on the pages that follow, begin entering your income and expenses. 

Because your LLC had a profit last year, your net profit on your Schedule C will transfer to Schedule 1 and then transfer to your Form 1040.   TurboTax will also generate a Schedule SE, Self-Employment Tax.  

Because it appears that you were a part-year resident of SC and NY, you will likely have to file returns for both states.  When you begin your federal return, in the My Info section of TurboTax online, scroll down to the bottom on the Personal info summary page, and in the subcategory Other state income, make sure you select SC as the state where you earned income (assuming you earned income in that state). 

If NY is your resident state now, when you are ready to begin your state returns, start with SC first.  When you complete your NY part-year resident state return, you will be asked to enter taxes that you paid to SC.  Thus, in order to know the full extent of you SC tax liability, start preparing your SC first, then move to NY.

Regarding apportionment, as you move through the SC and NY returns, you will enter that portion of your income that derived from SC sources and NY sources.  Both state returns may likely start with all income transferred from your federal return, but because you were a part-year resident of each state, you will enter that portion of your total income that was derived from each state.  Each state will only tax you on income derived from sources within that state.  

@wdegaude

[wdegaude]

Thank you so much for your response, George!

Forgot to explain that my LLC selected to be a Small Business Corporation which requires to file a 1120S.

BTW, I am using the Intuit Business software.

Would this change your answer?

[AliciaP1]

It does change the answer some.  @GeorgeM777 is correct about filing both states and that will be necessary for both the 1120S and your personal return.

In regards to your home office, the S-Corp should pay you rent for the use of the space and count that as rent expense on the 1120S.  Then, on your personal return, you can file a Schedule E to report the rental income and take the appropriate percentage of expenses for the space.

See S-corp home office for more details.

@wdegaude