WITAXLADY Posted September 24, 2021 Report Share Posted September 24, 2021 S corp - employs himself and wife. He can contribute up to $19,500 + catch-up of $6,500 = $26,000 then the employer can contribute up to $25% with the employer contribution - can the 401 amounts exceed his gross wages? Say his wages are only $32,000 - so the 25% is $8,000 - now = $34,000 or do his gross wages need to be at least that I do not think so as I have other W-2's where all their wages go into their retirement.. and it has nothing to do with the employer's match.. Correct? And he asked if he can increase his wages for 2020 as he has until October to fund his 2020 401 to the max of $57,000? What say you all on that one? Thank you, D Quote Link to comment Share on other sites More sharing options...
Lion EA Posted September 24, 2021 Report Share Posted September 24, 2021 Too late to increase 2020 wages. Had to pay himself during 2020 for 2020 wages, 2020 W-2. Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted September 24, 2021 Report Share Posted September 24, 2021 14 hours ago, Lion EA said: Too late to increase 2020 wages. Had to pay himself during 2020 for 2020 wages, 2020 W-2. If he took distributions, you could claim a bookkeeping error and reclass those distributions as net wages. Of course there will be late payment of payroll tax penalties. 1 Quote Link to comment Share on other sites More sharing options...
WITAXLADY Posted September 29, 2021 Author Report Share Posted September 29, 2021 Thank you, D Quote Link to comment Share on other sites More sharing options...
Catherine Posted October 5, 2021 Report Share Posted October 5, 2021 On dodge a colleague of mine has used locally is to issue a 1099-NEC to the S-corp owner who then puts it on a Sch C with his 1040. He mainly uses it for smaller corps that frequently don't have the cash flow to reliably have a payroll - but it might work here. As long as the owner is paying that fica tax, the service might not make too big a fuss. Quote Link to comment Share on other sites More sharing options...
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