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Self employment tax income flowing from 1120S K-1

Buckeye
Level 2

How do you get ordinary business income on a K-1 1120s to flow to Schedule SE?

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sjrcpa
Level 15

You were told wrong. That would be true (most likely) if it was a partnership K-1.


ex-AllStar

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apex
Level 1

Ordinary income from 1120s is not subject to SE.

Buckeye
Level 2

I was told by the CPA firm that prepared the 1120 S that ordinary business income on line 1 of K-1 is subject to ss taxes.

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Buckeye
Level 2

More specifically, line one is subject to ss tax.  It is ordinary farm business income.

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sjrcpa
Level 15

You were told wrong. That would be true (most likely) if it was a partnership K-1.


ex-AllStar

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Buckeye
Level 2

Yes you are right. I just received a call from CPA firm correcting themselves.

HARTLEY
Level 1

What if I want to have my profit to go on an SE and to pay social security tax?  I don't have much paid in to social security and did not take payroll.

 

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IRonMaN
Level 15

"What if I want to have my profit to go on an SE and to pay social security tax?"

Then you need to pay yourself a payroll check.

ACME Taxes, Tattoos, Tires and Tasmanian Devils - one free devil with every return.
Just-Lisa-Now-
Level 15
Level 15

What's the point of an SCorp if youre going to pay SE tax on your profit...you may as well have stayed a sole proprietor.

 


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
IRonMaN
Level 15

That's the problem.  A lot of folks take advice from their barber's neighbor's cousin and create Sub S entities when they should have been a sole proprietor.

ACME Taxes, Tattoos, Tires and Tasmanian Devils - one free devil with every return.
Just-Lisa-Now-
Level 15
Level 15

Your client should have received a W2 from the S-Corp for his wages/earned income.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪