Discussion:S-Corp distributions being reclassified as wages?

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Revision as of 15:40, 24 April 2006

Discussion Forum Index --> Tax Questions --> S-Corp distributions being reclassified as wages?

Sfrey006 (talk|edits) said:

24 April 2006
New client....Single-owner S-Corp.Pays himself $2.5k twice a month. When the payment is made he records..... Dr. Retained Earnings $2.5k 
                                                                                                                    Cr. Cash          $2.5k

Each quarter, he has filed the Form 941 with $0.00.

Then, at 12/31, he will reclassify the distributions from retained earnings to "payroll expense" and remit all payroll taxes and withholdings with the 4th Quarter returns.

Is this acceptable?

I mean, it seems like he pays everything....its just a question of timing. It surely is easier to do it only at year-end....

Thanks...Steve

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