TaxGuyBill
Level 15

@Anonymous wrote:

So what is the CPA’s responsibility here if he recommended 1099 for owners comp or just Corp check to owner.  

still trying to understand how the funds on line 7 of 1120s owners comp would be classified if there was no w2.  Is it considered business income ? SE tax was applied to the full amount 


 

The tax preparer is responsible for correctly preparing the tax return(s) they are being paid for.  If they give wrong advice, they could be responsible for paying any costs to correct the situation, such as penalties.

The shareholder received compensation.  That is wages.  If a W-2 was not prepared, one needs to be prepared, along with the other employer forms.  There will be late penalties.