W-2 FROM S-CORP

Forum|Forum|1 year ago
March 8, 2025
7 replies
64 views

Hello and thanks for help.

I am going to file my S-Corp 1120-S, and I have a w-2 with 401-k from s-Corp I have some quessions:

1- Should I enter box 1 amount for compensation for officer or box 3

2- for 401-k amount box 12a D , what should I do on 1120-S forms?

3- For IRS side my reasonable compensation is box1 or box3?

really appreciate it for your help.

PatriciaV

Level 15

1) Enter the amount from Form W-2 Box 1 under Deductions >> Salaried and Wages in the "Officers (>2% owners)" box. W-2 Box 3 is the amount of wages used to calculate Social Security withholding.

2) The amount from Box 12(a) Code D should be entered under Deductions >> Retirement plan contributions. You may need to check the box for "Already contributed to a retirement plan for 20XX" in order to open the entry box. If the S-Corp also contributed to the pension plan, add that amount to the entry from W-2 Box 12.

3) Shareholder-Employee Compensation includes all compensation paid to officers of the corporation (owning >2% of stock). Generally, this reflects the amount from W-2 Box 1. This amount appears on Form 1120-S Line 7 and includes fringe benefits such as health insurance coverage, but not elective deferral plan contributions made by the corporation.

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MANI1346Author

Level 5

Thanks but I did not get my answer.

is it possible just answer for my questions.

DaveF1006

Level 15

It depends. Here are some guidelines to follow in reporting this.

Box 1 vs. Box 3 for Officer Compensation: For the purposes of filing Form 1120-S, you should use the amount in Box 1 of the W-2 for officer compensation. Box 1 reflects taxable wages, tips, and other compensation, which aligns with what the IRS considers as reasonable compensation for services rendered.
401(k) Amount in Box 12a (Code D): The elective deferrals to a 401(k) plan (reported in Box 12a with Code D) are not included in Box 1 wages but are included in Boxes 3 and 5 for Social Security and Medicare wages. On Form 1120-S, you should report the total compensation paid to the officer, which includes the wages in Box 1. The 401(k) contributions are typically accounted for as part of the corporation's payroll expenses.
Reasonable Compensation for IRS: The IRS considers Box 1 as the basis for determining reasonable compensation for S-Corp officers. Reasonable compensation is the amount paid to shareholder-employees for the services they provide to the corporation, and it must be reported as wages subject to employment taxes.

Please reach out if you have additional questions or if I haven't fully addressed your question.

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MANI1346Author

Level 5

Thanks : what does it mean: The 401(k) contributions are typically accounted for as part of the corporation's payroll expenses.

PatriciaV

Level 15

The corporation's contributions on behalf of the shareholder/employee are reported under Deductions >> Retirement Plan contributions on the S-Corp's return.

Contributions made by the employee are considered compensation to the employee and included in Box 1 wages on the W-2, which is reported under Deductions >> Salary and waged paid..

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