Discussion Archives:Company wage

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Discussion Forum Index --> Advanced Tax Questions --> Company wage


Discussion Forum Index --> Tax Questions --> Company wage

Sammy5 (talk|edits) said:

7 November 2007
This is a great site. I'm so happy to have found it. I started my company about 4 years ago and it is an s type corporation. The first 3 years I didn't take any money out of the company because I didn't want to pay taxes on it. Now this year the account has gotten so big that I switched it to personal CDs. I guess now that it is in my name I need to pay taxes on it. Should I just submit 30% using a 1040-es? Thanks for your help.

Kevinh5 (talk|edits) said:

7 November 2007
you need to speak with a tax professional - your assumptions are all totally incorrect

Sammy5 (talk|edits) said:

7 November 2007
I've been doing my own taxes for 15 years and never had any problems. I'll check around, but thought that 2 minutes of someone's time wouldn't put them out that much. Seems like a simple enough question.

Kevinh5 (talk|edits) said:

7 November 2007
the question is fine, it's your assumptions that are all wrong.

the answer to your question is "no"

BEGooding (talk|edits) said:

November 7, 2007
Not taking money out of (an S) Corp does not shield it from taxes; all income of an S Corp flows thru to owners. Did you just become an S Corp in year 4?

JR1 (talk|edits) said:

November 7, 2007
Sammy, stop now, you're in very deep water and don't even have a clue. I'm shocked that mail hasn't come (yet). It will. Whatever profit was in the corp flows straight thru to your personal return REGARDLESS of whether you take the money or not!! What did you think that K-1 was for, anyway? Get help. Today.

Death&Taxes (talk|edits) said:

7 November 2007
Sammy, you are speaking in one tongue and we in another: just from observation, what do you mean by 'company?' I know lots of people have said to me, 'I'm going to start a company' but have no idea of entity selection. Maybe you have no idea what 'entity selection' even means. We sure don't have any idea what 'company' means that way you have presented it to us.

Maybe you only started The Sammy Company, opened a bank account in your name and kept the money in it, thinking you did not have to pay any tax? Or maybe you formed a corporation or limited liability company? None of us has any idea what you did. This is one case where 'Boots on the Ground' will get you many more answers than we can. Look in the phonebook. You need a good CPA, Enrolled Agent, or Public Accountant to talk to, someone familiar with your tax filing obligations.

Kevinh5 (talk|edits) said:

7 November 2007
("What K-1?")

BEGooding (talk|edits) said:

November 7, 2007
..."for 15 years and never had any problems". Just because you haven't been audited doesn't mean it was done correctly.

JR1 (talk|edits) said:

November 7, 2007
I'm fat, but haven't died yet.

CrowJD (talk|edits) said:

7 November 2007
"What K-1" hit it on the head. It's amazing how many CD's you can buy when you do this. If it was the type that walks into my office, all the money would be gone by now to boot :) You do have to admit that Sammy was consistent in his/her application of the "law".

Taxref (talk|edits) said:

7 November 2007
Sammy5, I agree with the others that you need to see a professional ASAP. Based on your posts it really sounds as though your tax returns may have some serious errors in them. I'm afraid that while you intended to ask a 2 minute question, you instead got into subjects about which a chapter could be written.

This past Sunday I refereed a soccer game for under 12 boys, which is quite rare for me as I usually officiate much older players. For whatever reason, a continuing myth in soccer is that opponents don't have to withdraw 10 yards on a free kick unless the kicker asks them to. That interpretation changed at least 16 years ago, but its still widely believed.

Well, evidently the coach of the blue team in that game still believed the myth. He ordered his players to stand directly in front of the kicker, causing confusion for the youngsters as I immediately ordered them away. Had they not withdrawn the 10 yards and been hit with the ball from the kick, I would have to sanction them for misconduct.

The point of all this is that even though the coach was incorrect, his team had not yet been burned for his errors. That good luck, however, only reinforced his misconception about the rules. Needless to say, a soccer referee showing some kid a yellow card is no where near as ominous as an IRS agent questioning your tax returns. Don't go with assumptions and myths when it comes to your taxes.

Jumbo (talk|edits) said:

8 November 2007
Generally, if the corporation is a C corp. , it is better to take wages & salaries to keep the bottom line down. In case if the corporation is an S corp, Irs normally expect officers or the owners who are working as well to draw some resonable salary.
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