Discussion:S-Corp Owner paid with 1099???

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Discussion Forum Index --> Advanced Tax Questions --> S-Corp Owner paid with 1099???


Discussion Forum Index --> Tax Questions --> S-Corp Owner paid with 1099???

NewtoTax (talk|edits) said:

13 February 2008
I have a new S-Corp client whose previous tax preparer let the fact that the owners were paid with 1099s instead of W2s go without question. The client is in the Finacial Planning field in which it is standard to be paid straight commission. However, what I know about the S-Corp owners is that they should be drawing a reasonable salary - ie W2 not 1099.

Because it is standard practice in this business to pay straight commission, could this be correct? Or do the owners need to be paying themselves salaries?

THANKS!

JR1 (talk|edits) said:

February 13, 2008
Should be on W2.

Death&Taxes (talk|edits) said:

13 February 2008
Go to Discussion: S Corp Owner Salary vs. Distributions and about 15-20 answers down, DZ discusses this issue. I am pretty sure there are other takes on it in this 280+ replies.

NewtoTax (talk|edits) said:

13 February 2008
How would you go about correcting? Books are done for 2007 with commissions paid (1099) to officers in excess of $500,000. Past returns included this in commissions paid with $0 on line 7 of the 1120S. The owners then file a Sch. C with their income and related expenses.

Any help is appreciated!

Death&Taxes (talk|edits) said:

13 February 2008
This has been discussed fairly often: here are a couple of freebies: Discussion: C Corp not witholding do I now do a 1099

Discussion: S Corp Officer did NOT take salary - big trouble? payroll?

Discussion: Solved a payroll problem - I think

Discussion: S-Corp that didn't pay payroll salary to officers

JR1 (talk|edits) said:

February 13, 2008
Wouldn't bother for last year now. Fix for 08 tho'.

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