Discussion:S-Corp-Salary: file a (very) late 941 or issue a 1099?
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Discussion Forum Index --> Tax Questions --> S-Corp-Salary: file a (very) late 941 or issue a 1099?
| 15 March 2007 | |
| I'm the un-paid, non-preparer (whew!) of a friend that needs help! He has an S-corp, sole SH/officer. In 2004: $87k net income, $26k in distrib, but NO salary! 2004 Return has not been filed yet.
Prior years, salary taken when they had income, which was on and off through several years. 2002: Net loss, no salary or distrib. 2003: $20k income, no distrib, no salary. 2004: $87k net income, $26k in distrib, but NO salary! Return has not been filed yet. 2005: $20k salary & 2006: $30k salary Should I suggest they file a (very late) 941 in 2004 and incur the penalties or do a late 1099? They have enough est taxes pd to cover the SE on a 1099 on the 1040, but I'm concerned about salary taken in previous years. I think they could get away with a $15k-$20k salary for 2004. It that reasonable? 941 or 1099? Whaddya think? | |
| March 15, 2007 | |
| While the 1099 is appealing for simplicity, the penalty maxes at 10%. Assuming the interest is the same either way, the penalty on the 1099 reporting on the 1040 would be 25% failure to file max, plus .5% per month since, plus the interest. Anyone else? | |
| 16 March 2007 | |
| Please clarify penalties. What would the 10% penalty be on? The 2004 tax returns have not been filed. There is no penalty fo failure to file the 1040, since no tax will be due on the 1040 return even if we include 1099 income. | |
| 16 March 2007 | |
| There would be a penalty on the 941, failure to pay. I think the max is 10%, plus annual interest. | |
| 29 March 2007 | |
| what happens if a new s corp doesn't pay the shareholder/owner a w-2 & instead pays a 1099 with the shareholder reporting it as self employment income? | |
Bottom Line (talk|edits) said: | 30 March 2007 |
| Lots of threads on this. Basic conclusion is better than nothing for first year but need to do payroll properly going forward. | |
| 5 September 2008 | |
| For those of us that have actually implemented the 1099 method in this situation, has anyone not actually issued a 1099/1096 and simply reported the amount as Officer Compensation on 1120S and as Schedule C income on 1040? What are the possible consequences of not filing the paper? What good does a formal filing of 1099/1096 do at this point? | |
RoyDaleOne (talk|edits) said: | 5 September 2008 |
| I would file the returns without W-2 or 1099 if that is what real happen on these old returns.
Some of the years have no need for W2 or 1099, in my very learned opinion. | |
| 6 September 2008 | |
| I'd file properly and do a very late W-2 and 941 for the 4th q. Then do the 1120S. Pay the penalties and be done with it. Otherwise the IRS can say that the s corp is evading p/r taxes, and that's againgst the law. | |
