Which TurboTax to purchase for my S Corp and my personal 1040

[Jennifer_DoorPRO]

We would like to use TurboTax this year.  Please help me choose which product to purchase.  My accountant last year filed two returns, a S Corp income tax return 1120-S and a 1040 personal federal income tax return with several schedules attached.  We pay estimated quarterly tax payments through our personal.   My husband and I are the sole owners.  We are not employees.  We pay ourselves through draws and not payroll.  Is there a particular product for our situation? 

I appreciate your help.  Thank you.

[DoninGA]

You will need two separate TurboTax programs for your situation.

To complete and file a S Corp tax return, Form 1120S, you would need the TurboTax Business Edition.  The Business Edition can only be installed on a Windows based personal computer, not on a Mac or online.  The Business Edition cannot be used to prepare a personal tax return, Form 1040.

Go to this TurboTax website for the Business Edition - https://turbotax.intuit.com/small-business-taxes/

For your personal tax return, Form 1040, you can use either the TurboTax online editions or the TurboTax desktop CD/Download editions.  It would be recommended that you use the desktop editions since they provide more features than the online editions, such as direct access to all forms, schedules and worksheets.

For the online editions you would need to use the Premier edition or higher.

Go to this TurboTax website for the online editions - https://turbotax.intuit.com/personal-taxes/online/

You could use any of the TurboTax desktop editions since they all include the same forms, schedules and worksheets to prepare a personal tax return.  The higher priced editions give more help and guidance than the lower priced desktop editions.  All the desktop editions include one free state program download when purchased from TurboTax (except Basic).  They al also include 5 free federal tax returns (per license) with any further tax returns beyond the 5 having to be printed and mailed.

Go to this TurboTax website for the desktop editions - https://turbotax.intuit.com/personal-taxes/cd-download/

[Anonymous_]

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@Jennifer_DoorPRO wrote:

My husband and I are the sole owners.  We are not employees.  We pay ourselves through draws and not payroll. 

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Shareholders who perform services for the corporation are generally considered employees and are required to take a reasonable salary in exchange for the services rendered.

See https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-employees-shareholders-a...

In your scenario, you would need two TurboTax products to prepare your income tax returns; TurboTax Business (which must be installed and run in a Windows environment on a computer) for the S corporation (Form 1120-S) and a personal income tax return preparation product (for example, TurboTax Premier) for your individual (presumably joint) income tax return (e.g., Form 1040).

I would strongly urge you to use a tax professional for both tax guidance and return preparation and revisit your status as S corporation shareholders with your accountant.

[rjs]

If your accountant didn't tell you that you are required to be paid a reasonable salary, you need a new accountant. You can expect to hear from the IRS when they see that you didn't report any earnings as employees. This is one of the things that the IRS frequently audits.

[Jennifer_DoorPRO]

Yes. We pay ourselves through monthly draws. We pay quarterly estimated taxes.  We are choosing Turbo Tax this year.  Thank you for your help 

[Critter]

Sorry to tell you this but monthly draws are not payroll. You must issue yourself w-2s and pay the payroll taxes quarterly. Failure to pay reasonable wages to the working owners of an s corporation is a highly audited section of the tax law that comes with severe penalties. Seek local professional guidance in getting this setup properly at least going forward so you're not hit with problems later. If your accountant in the past did not tell you about taking wages then they did you a grave disservice.

[Jennifer_DoorPRO]

What does each program cost? Where can I purchase these products?  My husband asked if they are available on Amazon?  If we purchase these products through Turbotax can we have the returns reviewed by an expert? We are trying to save money by doing this ourselves.  Our accountant is too expensive.  

Thank you.  

[DoninGA]

@Jennifer_DoorPRO In my answer directly above this post I gave you the websites for the Business Edition along with the online and desktop personal editions.  The prices on shown on those websites.

[Anonymous_]

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@Jennifer_DoorPRO wrote:

We are trying to save money by doing this ourselves.  Our accountant is too expensive.  

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To be perfectly blunt, you are already in a hole so you should quit digging.

Your accountant, expensive or otherwise, is not providing accurate information; you should be paying salaries if you and your spouse are performing services for the corporation and, as @Critter mentioned, quarterly estimated taxes that you currently pay would not include payroll taxes and there are penalties for that situation. 

A competent accountant is a virtual necessity in your case.

[Jennifer_DoorPRO]

We are set up as a pass through business.  Our shareholder draws are reported to the IRS through our personal tax return.  As it was explained to us, " When a pass-through business earns profits, it does not directly send a portion of the profits to the IRS.  Instead, the profit is "passed-through" the business and onto the tax return of the business owners.  We as owners are then responsible for paying the tax to the IRS, meaning that the pass-through business pay individual income taxes at the individual tax rate, not corporate income tax"  We also pay self employment tax. 

Now with the current event going on we chose not to pay out any draws at all because we can't afford to pay ourselves. 

If we choose to switch to pay ourselves as employees with a salary and payroll, at this time we could not afford that as well.   We are currently keeping our business afloat. 

[Anonymous_]

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@Jennifer_DoorPRO wrote:

We also pay self employment tax. 

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Yes, and that is incorrect since you are shareholder-employees of an S corporation and are not sole proprietors.

The payroll taxes are withheld and paid by the S corporation, so it is basically a wash, but it is currently not being handled correctly.