s corp question

[grambuffy]

My client has a s corp accountant who told him his 1099-Misc income would not have to pay social security

tax. Being I just do simple 1040 returns as a rule and I am not an accountant I was going to put the income

on a schedule C with a Schedule SE if this income is not reported this way does the 1099-misc income go

to line 7 as wages or to line 21 as other income? Anyone who can help, your imput will be appreciated.

Thanks, Kathy

[Catherine]

My client has a s corp accountant who told him his 1099-Misc income would not have to pay social security

tax. Being I just do simple 1040 returns as a rule and I am not an accountant I was going to put the income

on a schedule C with a Schedule SE if this income is not reported this way does the 1099-misc income go

to line 7 as wages or to line 21 as other income? Anyone who can help, your imput will be appreciated.

Thanks, Kathy

Kathy --

There's more information needed here. "No social security tax" can mean lots of things, from the accountant is incorrect to the box checked to he's already maxed out.

What does the 1099-MISC say? Box 7 - non-employee compensation? Box 1 - rents? Box 2 - Royalties? What was the person's W-2 salary?

Tell us those things, and we can help.

Catherine

[Jake]

It may be that your client misunderstood his accountant. Assuming that the income on the 1099-Misc is reported in box 7 it is going to be subject to SE tax. I suspect what the accountant told him is that the income from the k-1 will not be subject to SE tax. BTW the use of a 1099 to show income to a <2% s/h from a S Corp is common but incorrect.

[grambuffy]

Kathy --

There's more information needed here. "No social security tax" can mean lots of things, from the accountant is incorrect to the box checked to he's already maxed out.

What does the 1099-MISC say? Box 7 - non-employee compensation? Box 1 - rents? Box 2 - Royalties? What was the person's W-2 salary?

Tell us those things, and we can help.

Catherine

client has a pro shop no W-2 to him, just a 1099-Misc box 7 in wifes name

ps I just notice made out to wife when I rechecked 1099

[Catherine]

client has a pro shop no W-2 to him, just a 1099-Misc box 7 in wifes name

ps I just notice made out to wife when I rechecked 1099

This sounds not right in a bunch of ways.

First off - why is he not an employee of the S-corp?

Next - what is the wife doing to get a 1099 instead of a W-2? Does she have other work? How much is the 1099 for -- a small sum (under a thousand or so dollars) -- or more?

Next - I'd consider very carefully if you want this client. The appearance is of people (including the supposed accountant doing the books) who have no idea what they are doing, what they are supposed to be doing, and don't care all that much about getting it right.

Catherine

[michaelmars]

IF your client is the owner of the s corp and is using another for the corp and u for the 1040 i wouldn't touch it

[Catherine]

IF your client is the owner of the s corp and is using another for the corp and u for the 1040 i wouldn't touch it

That could be a little harsh. They may have a semi-retired accountant who doesn't want tax filing hassles. The "accountant" may actually be a bookkeeper who isn't qualified to do returns - and knows it. But it sure sounds, at the very least, that whoever is doing the books hasn't the foggiest notion of what S-corp accounting requirements (let alone _tax filing_ requirements) are.

But either _tons_ more info is needed - along with a _complete_ willingness on the owner's part to get it right - or it's time to back _away_ from this return. Running and screaming just makes them chase you.... ;-)

Catherine