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Old 06-17-2019, 01:51 PM
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SMLLC taxed as S-Corp Estimated Taxes

Hi,

I have a SMLLC taxed as an S-Corp and was wondering if I need to submit a 1040-ES or 1120-W quarterly.

I do have myself on a payroll, and I'm paying payroll taxes quarterly.

My understanding is any leftover business income gets distributed to members of the S-Corp (me) as dividends, and tax for the dividends are paid by members of the LLC.

Is this correct ?

Also, if I was to leave some or all of the leftover business income in the business, how would that portion be taxed ?

Thanks in advance !



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Old 06-19-2019, 02:16 AM
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Join Date: Oct 2010
Posts: 5,233
I have a SMLLC taxed as an S-Corp and was wondering if I need to submit a 1040-ES or 1120-W quarterly.======>it depends; Corps calculate and file estimated taxes on IRS Form 1120-W. You need to make estimated tax payments if you expect to owe at least $1k in tax for the current year after subtracting any tax withholding or credits you will claim on your tax return. You must also pay if you expect the total of your withholding and credits to be less than 90% of your current year's taxes or 100 %of the previous year's taxes , whichever is smaller

I do have myself on a payroll, and I'm paying payroll taxes quarterly.===>>definitely;since you are not a passive investor but are active in running the S corp, then the IRS will consider you a reg W2 employee of the corp. then,, you must receive at least some of your share of the corp?s profits in the form of a salary on a W2. The same holds for any other shareholder-employees as well as for any corp officers regardless of whether they?re also shareholders. so it?s important to be aware of the requirement to pay shareholder-employees a salary. Unlike distributions, shareholder-employee salaries are subject not only to the personal income tax but also to federal employment taxes.

My understanding is any leftover business income gets distributed to members of the S-Corp (me) as dividends, and tax for the dividends are paid by members of the LLC.===>it depends; S corps, in general, do not make dividend distributions. They do make tax-free non-dividend distributions unless the distribution exceeds your, the shareholder's stock basis. If this happens, the excess amount of the distribution is taxable as a long-term capital gain on sch D of 1040.

; While an S corp does distribute profits to its shareholder, you , they are not considered dividends because that term specifically refers to profits paid out after taxes. An S corp is not subject to corporate tax unlike reg C corp.

Is this correct ?====>as mentioned above.

Also, if I was to leave some or all of the leftover business income in the business, how would that portion be taxed ?====>asmentioned above; Just like regular corps, S corps can distribute profits to their shareholders, keep them as retained earnings or do a little of both. As you can see,An S corp doesn't pay corp taxes. The shareholders pay all the taxes on the corp's profit, no matter what the corp does with that profit. If the corp then distributes profits to the shareholders, the distribution isn't taxable income to the shareholders because they are already paying income taxes on the money on their 1040s. But if it chooses to keep profit as retained earnings, the shareholders still pay income taxes on the money.



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