When I file my 1040 do I add my W2 and does my K1 supposed to include my income?

Forum|Forum|3 years ago
February 8, 2023
2 replies
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Scenario:

I am the sole owner of a S Corp. I paid myself a wage as an employee so I have a W2. Because of transitioning of the business I have a loss. Should my K1 include my Employee income? It seems I 've added the w2 to my 1040 but the income is also on my K1 as being an officer and Employee. I own 100 % of the shares.

DavidD66

The salary/wages you paid yourself (reported on Form W-2) as an S-Corp employee are deduction for you S-Corp. They are also reported on Form 1125-E along with Form 1120-S as part of the S-Corp tax return. You K-1 will also reflect your W-2 wages on line 17 - Other Information, using Code V for Section 199A W-2 Wages. This entry may be needed to calculate your Section 199A deduction.

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ladiedAuthor

Ok thank you.

One more question if you can answer:

I pay myself a wage when I am directly working for the business, but when another business contract my business I just accept check to the company and then pay myself via a check. Is that correct? Do I have to include that as just a 1099 even though it's done from the Scorp or is it just considered wages? Hopefully this makes sense. Basically a company hired me to work they paid it as 1099 work to my scorp which my understanding is not required but it's what they did and I never seen that before.

ThomasM125

I think you mean you declare some of the money you take from the business as wages reported on a W-2 form and then you take additional distributions. If so, you don't need to report the additional distributions on a 1099-NEC form to yourself as they would represent distribution of profits from the business. However, you do need to pay yourself a reasonable wage from the business, so if the distributions are excessive you should include them in with your W-2 wages.

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Mike9241

if you did the S-Corp return correctly, you should have deducted your salary so the K-1 loss is after that. the net loss on the K-1 must be reported unless you want to overpay your taxes. also if you don't you'll be getting an IRS notice about the omission