dd4vols
Level 10
Level 10

partners can not draw payroll.  Reclass the net checks to guaranteed payments for each partner. Prepare 1065 and their personal taxes accordingly.  In the mean time, they need to do 941-Xs for each quarter they incorrectly included their wages, the federal withholding, their SS & MC information.  When the partnership gets those refunds, they can distribute those refunds to the partners to kinda make them whole.

If the attorney told them to draw payroll checks with taxes withheld, then they need to get another attorney.  If he told them to draw equal payments and they assumed it meant payroll wages, then the mess is on them.

If an answer solves your issue, click on the "Accept as Solution" button! Makes it easier for people to find answers to similar questions that have already been posted.