Taxpayer is classified as 1120S, and paid himself wages. No withholdings, no W-2, all wages were included as business profit and taxes paid accordingly on 1040. How do I break out wages for SE income correctly and on what lines on 1040 do I show
You aren't going to like the answer ---------------- you need to go back and prepare a W-2 and quarterly 941s.
I agree with IRMN. The taxpayer should have been paid as an employee and therefore you need to prepare W-2, pay 941 and state taxes and then amend the 1120S before you can correctly prepare the 1040.
Why can I not show officer compensation from S corp on line 21 other income 1040 and on line 2 Section A Sch SE and be done...he has done this for several years with another tax preparer, so I am just getting in on the tail end.
Just because the prior tax preparer prepared things wrong doesn't mean that you should continue down that path. A good defense against preparer penalties isn't "I just did it like the prior preparer".
IRS is quite clear that S-Corp Officer is an employee
