My wife and i are 50/50 owners of an S-Corp. The revenues are approximately $1000/month. I take a salary of approximately $800/month and the remaining balance pays the business credit card each month. We have business expenses of approximately $200/month (cell phone, gas) which is paid using the business credit card. How do we file taxes for the business? Does the business file a return? How are the business expenses deducted?

? My wife and i are 50/50 owners of an S-Corp. The revenues are approximately $1000/month. I take a salary of approximately $800/month and the remaining balance pays the business credit card each month. We have business expenses of approximately $200/month (cell phone, gas) which is paid using the business credit card. How do we file taxes for the business?=======>> your S Corp is not responsible for paying owed income taxes to IRS and your state Dept of Rervenue. The burden falls upon the shoulders of the corporation's shareholders.I mean S corps are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. You and spouse, as employees and shareholders of S corps report the flow-through of income and losses on your personal tax return form 1040 and are assessed tax at your individual income tax rates .However, All states do not tax S corps equallysome states ,like Massachusetts, tax S corps on profits above a specified limit. Other states don't recognize the S corp election and treat the business as a C corp with all of the tax ramifications. Some states , New York State and New Jersey, tax both the S corps profits and the shareholder's proportional shares of the profits.S Corps must submit annual tax returns to the federal government and state government. This is done by completing IRS Form 1120S with the IRS and your home state S corp return form with your home state Whereas individuals have a deadline of April 15 to file tax returns, an S Corp has a deadline of March 15. A company should have excellent bookkeeping practices all year to ensure that tax returns are filed expediently and accurately As compared to a sole proprietorship or a one-member LLC operating as a sole proprietorship for tax purposes, an S corp requires quite bit of additional tax accounting.
The first bit of tax accounting required for an S corp is payroll accounting for the corp's employees. As a general rule, your S corp must pay you and spouse, its employees, reasonable wages. At a federal level, payroll accounting requires an S corp to file quarterly 941 payroll tax returns which report on the wages paid to employees, the Social Security and Medicare taxes that the employer owes on those wages, and the taxes withheld from the employee's gross wages for federal income taxes, Social Security taxes, and Medicare taxes. S corp payroll accounting also requires the filing of an annual 940 payroll tax return to report and pay federal unemployment tax aka as FUTA. Finally, S corp payroll requires the preparation and distribution of W-2 and W-3 forms which report to employees, the Social Security Administration, and to the IRS what wages and taxes an employer has paid over the year.



Does the business file a return? How are the business expenses deducted?=>You may claim only biz related necessary and ordinary expenses on your form 1120S. The S-Corp's deductible expenses are used either to decrease its overall reportable taxable income for the shareholders, or as separate credits or deductions that the individual owners can apply to their income. the S-Corporation subtracts ordinary business expenses such as rent, taxes, depreciation, advertising, interest and employee benefits provided by the business. Also, expenses associated with rental income and capital losses are netted with rental income and capital gains. Biz expenses are normally associated with yopur S corp , entities which are distinct and separate from the owners and employees. In most cases, biz expenses are reported on a corp income tax return instead of on a personal income tax return.

However, there are a variety of situations in which you, the taxpayers, may wish to deduct business expenses on your own personal income tax return. As you are a shareholder in an S-Corp, your business deductions can be listed directly on (or passed through to) your personal income tax return.Since you are an employee who has paid business expenses out-of-pocket, you can deduct some or all of your business expenses by itemizing them on 1040 Sch A of your personal income tax return