Self Employed Owner of a S-Corp

[JC_RABC]

I am a self employed owner of a S-Corp.  My husband is my employee and received a W2 from my corporation.  I would like to contribute to the self employed 401K that I open for him.  I did not know I have to report this on his W2 can I still contribute?  If so where can I enter this information?  Do I enter it via the S - Corporation Tax return or on our 1040 form?

[DavidD66]

You will have to issue a corrected W-2 for your husband, and also report the correction to the IRS.  You report the contribution as an expense on your company's 1120-S, line 17.  If you have already filed your company's 1120-S, you will have to amend that.  

[JC_RABC]

Thank you so much, do you know which form I should use to notify the IRS? I have not filed my 1120S or1040.  

[MaryK4]

You have to report it on the W2C  and also on the 1120Sn as an expense.

[JC_RABC]

do I have to amend the 941 form?

[DaveF1006]

First of all, you would need to enter this in the 1120 S return in deductions>retirement plan contributions. Then enter in Box 12 of his W2 as a code D. You will need to issue a W2C as MaryK1101 suggests.

Yes, you will need to amend the 941 because elective deferrals are always subject to FICA taxes.which must be deducted before deferring into the plan.

[JC_RABC]

Thank you all for so many reply.  This is a great community.  If I may give an example, it will help me greatly.

I own the S-Corporation and my spouse is my employee.

He is paid total compensation of 190k, 

In his W2, we listed the 190k in box1, 147k in box 3  and 190k in box 5,

The above is also what was reported in the 941.

He wanted to continue the contribution to his 401k of 20k, so he's asking if I deposit an additional 20k to his retirement.  so his total comp would be 210k

I assume the 20k isn't included in the his box 1,3,or 5 on the W2, is this correct?  Hence, I can file a W2c with all boxes (1,3,5) remaining the same and only update box 12 with a code D for the 20k.  

And I will expense the 190k as salary line 8 and the 20k on line 17, correct?

I reviewed the 941, I don't see a place to add the 20k , since it's not included in box1 ,3, or 5.   Additionally fica stops at 147k, is this correct?

We have a 2 person S Corp and we both set up a self employed 401k, just forgot to add it to the w2 form.

[RobertB4444]

You are ALMOST correct, but not quite.  

The additional 20K that you are adding to box 12 DOES appear in Box 5.  The compensation deferred to the 401K is subject to medicare.  It would also be subject to Social Security if he had not already reached the 147K threshold.  

So on his corrected W2 you will add the extra amount into Box 5 which also changes the tax due in box 6, and then you will add the additional entry into box 12.

On the corrected 941 you will add the additional 20K to the medicare taxable income and not the social security income and pay the tax due.  

You will also need to adjust your federal 940 to reflect the additional $20,000.

On the 1120S you will add the additional $20K expense to employee benefit programs.

That will reduce the amount of income that passes through on your K-1 by $20,000 so you will change the K-1 entries on your personal return.

That should be everything that you need to do.

@JC_RABC