1120S compensation: officer or wage? (line 7 or 8?)
Scott Reis
services. I believe from what I'm reading in IRS
instructions, etc., that all of my W-2 compensation should
be reported on line 8 of 1120S as Salaries and wages, and
not on line 7 as Compensation of officers. Is this correct?
I am the only officer, shareholder, employee. Almost all of
the income of the business (save leaving enough cash in the
business to pay operating expenses, purchase future upgrades
of development tool software, etc.) is paid to me by the
S-Corp in hourly W-2 wages for the computer programming /
consulting work I perform for multiple clients. 2000 is my
first year as an S-Corp (was sole proprietor 1040 schedule C
prior to 2000). The fact that I am a 100% shareholder /
officer is what makes me hesitate and think that I'd better
ask and make sure.
Thanks in advance for the help.
- Scott Reis
Successful Software
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David Woods EA MST
> services. I believe from what I'm reading in IRS
> instructions, etc., that all of my W-2 compensation should
> be reported on line 8 of 1120S as Salaries and wages, and
> not on line 7 as Compensation of officers. Is this correct?
>
> I am the only officer, shareholder, employee. Almost all of
> the income of the business (save leaving enough cash in the
> business to pay operating expenses, purchase future upgrades
> of development tool software, etc.) is paid to me by the
> S-Corp in hourly W-2 wages for the computer programming /
> consulting work I perform for multiple clients. 2000 is my
> first year as an S-Corp (was sole proprietor 1040 schedule C
> prior to 2000). The fact that I am a 100% shareholder /
> officer is what makes me hesitate and think that I'd better
> ask and make sure.
No offense, but you shouldn't be doing this yourself.
1) You are an officer of the corporation, any salary is
reported on Line 7.
2) If you operated as a Schedule C before incorporation, you
have Sec. 351 issues that need to be looked at in regards
to basis of assets.
3) A corporate return is not user friendly to someone
without the requisite bookkeepping/tax knowledge.
David M. Woods, EA, MST
(617) 723-2422
Boston, MA
www.rytercpa.com
Allan Martin
> I am a one-person S-Corp providing computer consulting
> services. I believe from what I'm reading in IRS
> instructions, etc., that all of my W-2 compensation should
> be reported on line 8 of 1120S as Salaries and wages, and
> not on line 7 as Compensation of officers. Is this correct?
Report your wages on line 7. You are an officer.
Gene E. Utterback
>> services. I believe from what I'm reading in IRS
>> instructions, etc., that all of my W-2 compensation should
>> be reported on line 8 of 1120S as Salaries and wages, and
>> not on line 7 as Compensation of officers. Is this correct?
>>
>> I am the only officer, shareholder, employee. Almost all of
>> the income of the business (save leaving enough cash in the
>> business to pay operating expenses, purchase future upgrades
>> of development tool software, etc.) is paid to me by the
>> S-Corp in hourly W-2 wages for the computer programming /
>> consulting work I perform for multiple clients. 2000 is my
>> first year as an S-Corp (was sole proprietor 1040 schedule C
>> prior to 2000). The fact that I am a 100% shareholder /
>> officer is what makes me hesitate and think that I'd better
>> ask and make sure.
> No offense, but you shouldn't be doing this yourself.
>
> 1) You are an officer of the corporation, any salary is
> reported on Line 7.
> 2) If you operated as a Schedule C before incorporation, you
> have Sec. 351 issues that need to be looked at in regards
> to basis of assets.
> 3) A corporate return is not user friendly to someone
> without the requisite bookkeepping/tax knowledge.
I concur with my esteemed colleague, Mr. Woods - you need
a tax pro.
Gene E. Utterback, EA