Great video on filling out the 1120-S tax return. Just ensure you filed your 2553 to make the S election. Even a late election is allowed with proper approval. That is why it makes sense to start your business as a single-member LLC disregarded and decide if you should make the late 2553 election as the year goes on.
Hi Jason, Thank you for your detailed video on 1120-S. It has been very helpful to me. I have a Single Member LLC, taxed as S-Corp. Please help me answer the following. 1. The cash I took as distribution should be on 1120S, Line 16d. right? 2. Schedule M2, Line5 (Other deduction): Should I enter my charitable contributions here? 3. Schedule K-1 Part-1 Item D: What should I enter in the number of shares as it is a SMLLC and there no shares distributed?
Extremely helpful! Thanks for posting this kind of content. You explanations are very clear. Do you have any videos on adjusting Retained Earnings? Adjusting Retained Earnings on the tax returns to match books and vice versa? THANKS again
Looking back through my 1120S forms, it appears that my CPA included tips in the officer's wages, but tips were not included in gross receipts and sales... I'm getting ready to file amended returns for the past two years, and I intend to fill out the forms myself rather than go back to that CPA... So the question is, do I include tips in the gross receipts and sales, as well as compensation of officers and salaries and wages, or do I exclude them from everything? Anybody have any advice they can give me? Also, thank you so much for posting this video. The 1120S form has been the bane to my existence for years, now...
Thanks so much for your tutorial, There's one thing I'm still confused about the ordinary income amount allocated to each shareholder, they will sign themselves a check for the amount of their ordinary income?
Hi Jason, are S Corp loans to shareholdersa red flag to the irs and also if they are not paid eithin the year, would that loan amount be taxed as capital gains?
This is very informative, thank you! I have a question or maybe two questions🙂 If I opened a SMLLC and chose to elect S-corp for tax purposes, how would one go about distributing the profit shares to myself if I am the only shareholder or do the rules of profit sharing apply to this scenario? b. If I am following the 60/40 rule of paying myself, say using your example above of 60,000 income, and i pay myself 36,000 in wages, which i will report on my 1040. Do I report the 36,000 on my 1120S LINE 1 or do I report 24,000? Thank you!
Thank you! My first year with this form. at about 14:06 minutes you show a Federal Supporting statement for items not listed on page 1. Is there a standard statement form for this? Downloadable?
Thanks for watching! There is no standard format for supplemental statements. The one included in this tutorial was automatically generated by the tax software. You can make your own similar statement using word or pdf if you plan to paper file.
Sir, I did not take any distributions for 2022.only took salary and home office deductions..do I still need to enter item no I . I am the sole 100% shareholder and just started the scorp mid last year
Hi.I have question about 1120s filing. Lets say i have filed the 1120s now i need to show the final numbers to my personal tax.i am 100%owner.how this will show up on my personal tax as a gross net comes from my business name or must be done K99.or what is the correct way.?thx
Dear Jason thank you for your replay.I am not an accounted and want to know the correct way but your answer is not so much understandable for me. May be i go little detail. Lets say "easy done"is the corporation name and it has gross income of 60k.after expanses the clean net is 30k.the corporation has 100% one owner .now coming on the 1040 that must to file as an personal tax .is personal income will show on 1040 that the 30k came from "Easy done"corporation or it must to file the 1099k . Thank you again.
Line 19 on Page 1 of the Form 1120-S is used to report other tax deductions that are not reported in Lines 7 through 18. You can attach a supplemental statement to list those expenses.
You never have to attach any incorporation documents to the initial year return. If you dissolve an S corporation or C corporation, the dissolution plan is filed separately with a Form 966
Thank you very much for the video. The instructions are very clear. I have a question regarding the 'W-2 wages' line of the Statement A of the Schedule K-1. In the video, I saw that the wage in the schedule K was allocated to all the 3 shareholders according to their % in the corp. What if the S corp only paid W-2 salary to one shareholder? Would the amount in that shareholder's schedule K-1 equal to the entire amount in the schedule K while that of the other two shareholders be 0?
Hi Jason, I have a home business. I am an SCorp. For utilities and property tax expenses that are used in my home business, where would you put these expenses in the 1120S? I ask because under Scehdule C, these expenses are prorated depending on the square footages of my home office. It is not completely expensed 100% wrote off under Schedule C (I think). Whereas with 1120S, do we completely write off in 1120s? TIA
The S corporation can certainly deduct the home office expenses, however, the S corporation needs to setup an "Accountable Plan" in order to take the deduction. The accountable plan allows S corporation shareholders and employees to bill the corporation for their home office expenses, which can be deducted at the S corp level.
@@JasonDKnott Thank you. I've never heard of "Accountable Plan". I googled it. It seems simple and quite clear My issue is that the utilities and my property taxes are paid from my business checking account. Theoretically, I will not need to reimburse myself for the expense under Accountable Plan since my company has already paid for the expenses outright. My point is that between Schedule C and 1120S, 1120S will allow me the FULL expense write offs of these two expenses while Schedule C takes into account the % of the home office by the total sq footage. Interesting revelation? True or False? Naturally, I applied my property tax under the section Tax, License, and Fee Expenses section. Boom! Huge tax savings!! I am learning so much from your channel. This is my first year doing 1120S. TIA
@@marketbuy The scorp can only expense based off the same square footage you did on the schedule c. Meaning, the scorp can only expense the portion/percent of your home utilities and expenses that apply to the spaced used strictly for your business. That includes property taxes, mortgage interest, electricity, etc. irs outlines the guidelines for an acceptable plan, and it basically mimics what would be acceptable under the home office expense you were used to.
I just got hired at a public accounting firm and I am starting this week. I used to work in public accounting years ago, and though I am moderately familiar with this form, I am deathly afraid of tax preparation, this video is AWESOME!!! It cleared a bunch of misunderstandings and fears I had. Thank you brother sooooooo much. I am going to DEFINITELY subscribe!!! 🙂🙂🙂
Line 1 ordinary income passing through from an S corporation K-1 is generally reported on the Form 1040 in Schedule E Part 2. Shareholders that do not actively participate in the S corporation may need to complete Form 8582 with their Form 1040. The IRS also added Form 7203 for basis calculations.
If you have zero income and expenses, you can still follow the tutorial in this video, you just wouldn't have any dollar amounts on the forms, but you still need to include all of the required schedules and K-1s.
Good question! You do not want to net contributions and distributions. These amounts should be separately stated on the Schedule K-1 and the shareholder basis worksheets. On the IRS Form 7203 included with the shareholder's Form 1040, there are separate line items for the amounts of capital contributions (Line 2) and capital distributions (Line 6).
Thanks, very informative 👍 Questions. I thought meals were 100% deductible this year, right? Why do you call dividends to shareholders' distributions? S corp doesn't pay dividends unless the entity has converted from c to s corp
Yes! Some meals expenses were increased to 100% deductibility temporarily, but some still remain 50%, so carefully assess what types of expenses you have. Cash payments to equity shareholders are referred to as cash distributions for an S corporation shareholder. See line 16 code D on the K-1s
Very helpful. Would love to see some videos about stock basis calculations as well as tax forms when having a loss for the year. Thanks for putting this out there!
I’m an LLC SCorp. 2021 was my first year as SCorp. If I have to fill out 1120S manually, what should I do with my 2021 TurboTax Home and Office edition once we are done with all the tax filings which includes Schedule C? In other words, once I efile my complete returns, my Schedule C gets submitted to the IRS electronically altogether. Confused….
An LLC taxed as an S corporation must file its own tax return (Form 1120-S). Once the tax return is completed and filed, the individual shareholder uses the information on the Schedule K-1 to complete their own personal tax return.
@@JasonDKnott Hi Jason! Thank you for your reply. Yes, I understand that I need to file 1120S. My point was that when I purchased the 2021 TurboTax Home and Business edition, I thought that doing Schedule C, I can easily convert over to 1120S with a click of a button when done with Schedule C. This is not the case. In order to do 1120S form, I have to download the 1120S form and manually input the information. Or, in order to do 1120S, I have to buy Business TurboTax which has the capability to do 1120S. So now that I have completed Schedule C on my TurboTax, wouldnt my Schedule C gets submitted electronically along with my other forms and 1040 by April 15? (Yes, i know i have to submit my 1120S and K-1 by March 15…) Since this is my first time doing 1120S, I am thinking that i should not have bought TurboTax Home and Business edition if I have to do 1120S manually on the form, Perhaps I should have bought the simple Deluxe version instead
This is great tutorial! Can I have the related forms/docs in addition to the 1120S like Schedule K-1 Distribution Information that you show detailing the entries? Thanks.
Why did you distribute only $2000? Why left $23595 in the business account? How are shareholders supposed to pay taxes on that money if they don't have it in their own personal accounts?
Hello Jason how do you handle a the balance sheet for a new quick serve restaurant that i opened in MArch of 2023. Gettting lost of the opening part of the taxes Any suggestions for another Video or where to get help I do my own taxes and have always. this one has me stumped thanks for the info Great video
Thanks for posting this tutoria Jason! It's very helpful. I opened S-corp last year but without any income/activities. Wonder a) do I need to include Schedule B? b) where to find the shareholder's Basis Worksheet you covered around 31:00? and c) if you have the sample return you went over online that we can download for reference?
Glad it was helpful! If you don't have payroll setup for the 2021 tax year because you have no employees, then you don't have any payroll expenses to deduct on your return.
As a new small business owner, this video was a life saver. I spent hours of research before finding your video. THANK YOU!! I do have one question, my LLC (S-Corp election) does not have stock, nothing mentioned in my articles of organization. This was done based on a recommendation i received from a CPA (who i am not using anymore due to other mistakes). It is owned by two individuals with 50% ownership. So how do we fill out K-1?
Great timing and I just subscribed to your channel. I set up an S-Corp last year and trying to fill out the 1120-S the very 1st time. This video helped me tremendously . I have a question: Where do I report the investment/capital I put in the company on Schedule L? Do I put it under Capital stock (line 22) or Additional paid-in capital (line 23)? Thanks.
Generally, there is an amount on the capital stock line equal to whatever was stated in your company Articles of Incorporation. So, how many shares were issued and at what par value. Any cash paid for the shares in excess of par value are reported as additional paid in capital.
Hi Jason, This was super helpful. Since meals are 100 percent deductible 2021 and 2022 (if purchased from restaurant) we wouldn’t have to adjust 50 percent for that right?
That's correct. The government has temporarily allowed a 100% deduction for certain types of meals expense, but there are still types of meals expense that are only 50% deductible, and entertainment expenses of 0%. So need to carefully assess what types of meals expense you have
Thanks Jason for doing this - It was an excellent refresher for me and I learnt a lot. Can you please post something around reporting of PPP loans and forgiveness reporting on 1120S. I'm sure there are many small S Corps looking for help in reporting these correctly on their 1120S tax returns
Okay so I have a couple simple questions. This is thee last year I’m doing my own 1120-s as next year will NOT be as simple as this year and last for me and I’d rather have an expert be able to take advantage of all breaks and options. So, this year I had 0 revenue and a small amount of expenses. I’m an owner/employee and chose not to pay myself. So this 1120s should be almost full of zeros and only a handful of places where I put deductions for expenses. I should only be entering numbers for deductions (19,20,21) and schedule k (1) and not entering anything for schedule L, M-1 or M-2?
The Schedule K-1s should always be completed for each shareholder, regardless of income or expense. Technically, the Schedule L isn’t required unless the company has assets and revenue over 250k, however, our recommendation is to always complete Schedule L, M1 and M2.
@@JasonDKnott unfortunately I’m back again. I’m just confused by all of this. It’s just me on the business (S-Corp)…. I’m using TurboTax but do I still have to submit my 1120s and schedule k-1? I’m an s-Corp owner, work for free and have a day job.
I have never used a S corporation i opened back in 2016 and I am starting the dissolution process. Do you have a video on how to do this process when a company has made zero in the year and owners want to closed it ? Because we never use it I believe that the whole form can just be zero...right?
Unfortunately your situation might be more complicated. if you had an S corporation since 2016, arguable every year the entity has been in existence it should be filing a Form 1120-S, which means you have multiple years of late filed returns, even if all of the amounts are all zero. If you haven't been paying the annual state fees to keep it open, I would check with your state registrar first and see whether the entity was administratively dissolved, and if so, what year was it closed.
@@JasonDKnott I actually did called them and asked them if i had to file every single return and they said no only from the opening of the business which it was in september 2016 till August 2017. I already paid the penalties for that specific year so in this case they told me to file for that year and put in the for "final return" but I am concerned about how to fill it accurately. Even if its all zero there still a few boxes that I do not understand. so can you make a video in how to fill the returns when the corporation has not been used? I think it will help a lot of people. Thanks
The Form 1040 filing obligation is for the U.S. persons who are shareholders in the S corporation. A Form 1040 filing would include the information reported on Schedule K-1.
@@JasonDKnott Thank you. I am a nurse and I did home health this year between hospital employment. I received advice from other 1099 nurses to incorporate and did so but not until September. I had been a 1099 since June. I am trying to use turbotax to assist with filing the 1020-s but I listed my business as receiving income from June-October and my incorporation date as September. Now I am getting an error message from the software stating that "You have entered an effective date of S election that is later than the beginning of the tax year. Is this a problem and what do I need to do?
This video is for year 2021 and says the Meal deduction was reduced to 50%, but it should be 100% due to the temporary allowance per IRS Publication 463: "50% limit on meals. You can figure your meal expenses using either of the following methods. • Actual cost. • The standard meal allowance. Both of these methods are explained below. But, regardless of the method you use, you can generally, deduct only 50% of the unreimbursed cost of your meals. However, you can deduct 100% of your meal expenses if the meals are food and beverages provided by a restaurant, and paid or incurred after December 31, 2020, and before January 1, 2023"
Hi Jason, I apologized if I keep coming back to you. I am your student and learning as much as possible. I completed my 1120S. I need help in interpreting my K-1 from my TurboTax Line 1 is my Ordinary Business Income: $XX Line 15: Items affecting my shareholder basis: a) $YY with a code B. (this $YY amount is my PPP forgiven loan) b) $ZZ with a code D. (this $ZZ amount is my distribution) Since I haven't started on my 1040 yet, what do the 2 Lines 15 mean? Will I have to pay for a) and b) in my 1040 as part of my income tax which includes the Line 1? Or, is it just an FYI to the shareholder (myself)? TIA
I have a question for you please. My husband owns a trucking single-member LLC taxed as an S-corp. His LLC received a 1099 Misc from the trucking company with which it's contracted. My husband considers himself an employee and he wanted to issue a W-2 form for himself. We are stuck on the 1120-S form. This is our very first year filing taxes as an S-corp. We don't know what to do when it comes to K1. And also, when it comes to the per Diem and where to include it.. any information will be so helpful.
Thank you so much for this video. It is hard to find a great video like this. A quick comment and a question. Comment:If you plan to update this video, one section that needs some explanation is 'Tax and Payments' section on Page 1.. I am guessing it is skipped because SCorp is a pass through entity and no hence no entries needed. My question is line 23a a place to enter the estimated tax payments, i.e all the the emploee withheld IT and FICA tax?
Jason, thank you for the concise explanation of the 1120S. I struggle with inputting the proper amount of wages and payroll taxes from the W3 and the W2s. The books are not always accurate according to the W3. Do you have a video covering that and the proper steps to report it accurately?
Jason, if the M-2 line 8 is the exact same number as line 2 and line 6, then when the line 2 income is passed through to a single shareholder via K-1, how does line 8 get reduced back to 0 for the next year? Wouldn't line 8 be the next year's line 1?
This is very helpful thank you. Question an scorp can own an scorp if it owns 100% of the stocks (please correct me if I'm wrong). Would both s corps file 1120S? Does the owned scorp issue a k1 to the owner s corp? Thank you
Appreciate your video SO much! Question, the Balance Sheet has A/P on it, however this is a cash based business as marked on the tax return. Or can you have an accrual balance sheet and a cash basis tax return? Can you explain that to me?
Great explanation. Should we fill out all schedules of this forms for 2021 or just just first page? We made S-Corp in April 21 and was no activities since that time and no bank account... Thank you !
You should start writing books about taxes. you are the best, the way you explain things is so sample anyone can understand it. keep up the good work and thank you
Yes, the profits vs losses are separately stated on M-2. If you have a loss on Page 1 of the Form 1120-S, you report that on Line 4 in M-2. If you have profits on Page 1 of Form 1120-S, those amounts are reported on Line 2 of M-2.
Hi Jason. Your video cleared a lot up for me. Can you suggest an entity that supports the 1120S forms so I can prepare my return. I see lots of tax software that I can purchase that can do the job, but I don't have those types of funds right now. I already know Tax Slayer cannot as well Freetaxusa. Do you know of one? Thank you for your assistance.
There are a lot of good tax software products. This video tutorial was prepared using the Drake Tax Software, which I highly recommend. The most popular ones in this space are TurboTax, Taxslayer, H&R Block, Jackson Hewitt, TaxAct.
Hey Jason, Let's say the S-Corp is a 1-man-business, and is allowed to issue 2000 shares. Does the director of the company need to issues some of those shares to himself after starting the S-Corp, or are the 2000 shares already his since he's the director and the only individual involved in the business?
You want to check your organizational documents. Shares in a corporation are never issued automatically, as corporations must follow certain corporate formalities. For closely held companies, you generally see some form of board resolution to issue stock to the shareholder.
Hello, I have a question if the owner is paid cash, he did not have a w2, where do I put those cash salaries of the officer, does it go on the 1120s? Or do you have to fill out an additional form?
Cash wages paid to an independent contractor as generally reported as an other deduction on Line 19 of the Form 1120-S. The recipient would have to record the earnings as self-employment income on their tax return, which is subject to federal income taxes as well as federal self-employment taxes.
@@JasonDKnott the payment was made to the owner and not to an independent contractor. the owner paid himself with bank transfers not with W2 That is my question if the owner paid himself with bank transfers, is this declared on the 1120S or not?
For additional Form 1120-S tutorials, see the following playlist:
th-cam.com/play/PLTdpzKOWNutQW_Aofody_1p5EyeaB9MkV.html
Thank you , very helpful, I needed to brush up on my 1120s.
Glad it helped!
Thank you for explaining this for so clearly. I was having a panic attack
Glad it was helpful. Thank you for watching!
This was very easy to understand, considering I am not an accountant.
Glad it was helpful. Thanks for watching!
Great video on filling out the 1120-S tax return. Just ensure you filed your 2553 to make the S election. Even a late election is allowed with proper approval. That is why it makes sense to start your business as a single-member LLC disregarded and decide if you should make the late 2553 election as the year goes on.
Hi Jason, Thank you for your detailed video on 1120-S. It has been very helpful to me. I have a Single Member LLC, taxed as S-Corp. Please help me answer the following.
1. The cash I took as distribution should be on 1120S, Line 16d. right?
2. Schedule M2, Line5 (Other deduction): Should I enter my charitable contributions here?
3. Schedule K-1 Part-1 Item D: What should I enter in the number of shares as it is a SMLLC and there no shares distributed?
Hi, did you find the answer on your question #3? I have the same issue with LLC's stock
@@nadname5291 Yes. Item D and H as blank and item G as 100%
@@anurav9434 , thank you
Extremely helpful! Thanks for posting this kind of content. You explanations are very clear. Do you have any videos on adjusting Retained Earnings? Adjusting Retained Earnings on the tax returns to match books and vice versa? THANKS again
Can you please tell me which software i can use to efile my Form 1120s . I just registered my business in july 2023
Looking back through my 1120S forms, it appears that my CPA included tips in the officer's wages, but tips were not included in gross receipts and sales... I'm getting ready to file amended returns for the past two years, and I intend to fill out the forms myself rather than go back to that CPA... So the question is, do I include tips in the gross receipts and sales, as well as compensation of officers and salaries and wages, or do I exclude them from everything? Anybody have any advice they can give me?
Also, thank you so much for posting this video. The 1120S form has been the bane to my existence for years, now...
Hey. That Federal Supporting Statement at 12:42 is that a form u make or is that a form available online from the IRS? Cause I cant find it anywhere
Thanks so much for your tutorial, There's one thing I'm still confused about the ordinary income amount allocated to each shareholder, they will sign themselves a check for the amount of their ordinary income?
Client received 20k from sba EIDL , but 10k is a loan the other 10K is nonreimbursable. Where in this 1120s we need to put them?
Hi Jason, are S Corp loans to shareholdersa red flag to the irs and also if they are not paid eithin the year, would that loan amount be taxed as capital gains?
This is very informative, thank you! I have a question or maybe two questions🙂 If I opened a SMLLC and chose to elect S-corp for tax purposes, how would one go about distributing the profit shares to myself if I am the only shareholder or do the rules of profit sharing apply to this scenario? b. If I am following the 60/40 rule of paying myself, say using your example above of 60,000 income, and i pay myself 36,000 in wages, which i will report on my 1040. Do I report the 36,000 on my 1120S LINE 1 or do I report 24,000? Thank you!
Thank you! My first year with this form. at about 14:06 minutes you show a Federal Supporting statement for items not listed on page 1. Is there a standard statement form for this? Downloadable?
Thanks for watching! There is no standard format for supplemental statements. The one included in this tutorial was automatically generated by the tax software. You can make your own similar statement using word or pdf if you plan to paper file.
Sir, I did not take any distributions for 2022.only took salary and home office deductions..do I still need to enter item no I . I am the sole 100% shareholder and just started the scorp mid last year
Hi.I have question about 1120s filing.
Lets say i have filed the 1120s now i need to show the final numbers to my personal tax.i am 100%owner.how this will show up on my personal tax as a gross net comes from my business name or must be done K99.or what is the correct way.?thx
Once the Form 1120-S is filed, the shareholders use the information on their Schedule K-1 to complete their Form 1040.
Dear Jason thank you for your replay.I am not an accounted and want to know the correct way but your answer is not so much understandable for me.
May be i go little detail.
Lets say "easy done"is the corporation name and it has gross income of 60k.after expanses the clean net is 30k.the corporation has 100% one owner .now coming on the 1040 that must to file as an personal tax .is personal income will show on 1040 that the 30k came from "Easy done"corporation or it must to file the 1099k .
Thank you again.
Hi,
What shall we do with Box 18 or Box 19 at the very bottom?
Line 19 on Page 1 of the Form 1120-S is used to report other tax deductions that are not reported in Lines 7 through 18. You can attach a supplemental statement to list those expenses.
Do you have to attach a resolution or plan if you incorporated on 11/01/21 and decide to dissolve the same year
You never have to attach any incorporation documents to the initial year return. If you dissolve an S corporation or C corporation, the dissolution plan is filed separately with a Form 966
Thank you very much for the video. The instructions are very clear. I have a question regarding the 'W-2 wages' line of the Statement A of the Schedule K-1. In the video, I saw that the wage in the schedule K was allocated to all the 3 shareholders according to their % in the corp. What if the S corp only paid W-2 salary to one shareholder? Would the amount in that shareholder's schedule K-1 equal to the entire amount in the schedule K while that of the other two shareholders be 0?
Great video
Thanks!
Around minute 30, 12a, wouldn't the portion of his charitable contribution be $180?
John's ownership interest in the S corporation is 30%, so he is allocated only 30% of the $500 in total charitable contributions, which is $150.
Hi Jason, I have a home business. I am an SCorp. For utilities and property tax expenses that are used in my home business, where would you put these expenses in the 1120S? I ask because under Scehdule C, these expenses are prorated depending on the square footages of my home office. It is not completely expensed 100% wrote off under Schedule C (I think). Whereas with 1120S, do we completely write off in 1120s? TIA
The S corporation can certainly deduct the home office expenses, however, the S corporation needs to setup an "Accountable Plan" in order to take the deduction. The accountable plan allows S corporation shareholders and employees to bill the corporation for their home office expenses, which can be deducted at the S corp level.
@@JasonDKnott Thank you. I've never heard of "Accountable Plan". I googled it. It seems simple and quite clear My issue is that the utilities and my property taxes are paid from my business checking account. Theoretically, I will not need to reimburse myself for the expense under Accountable Plan since my company has already paid for the expenses outright.
My point is that between Schedule C and 1120S, 1120S will allow me the FULL expense write offs of these two expenses while Schedule C takes into account the % of the home office by the total sq footage. Interesting revelation? True or False? Naturally, I applied my property tax under the section Tax, License, and Fee Expenses section. Boom! Huge tax savings!!
I am learning so much from your channel. This is my first year doing 1120S. TIA
@@marketbuy The scorp can only expense based off the same square footage you did on the schedule c. Meaning, the scorp can only expense the portion/percent of your home utilities and expenses that apply to the spaced used strictly for your business. That includes property taxes, mortgage interest, electricity, etc. irs outlines the guidelines for an acceptable plan, and it basically mimics what would be acceptable under the home office expense you were used to.
@@509McGavin Thank you. You are correct. I hope to see Jason do a video on a Accountable Plan
I just got hired at a public accounting firm and I am starting this week. I used to work in public accounting years ago, and though I am moderately familiar with this form, I am deathly afraid of tax preparation, this video is AWESOME!!! It cleared a bunch of misunderstandings and fears I had. Thank you brother sooooooo much. I am going to DEFINITELY subscribe!!!
🙂🙂🙂
I am in the same boat. I feel relieved now!
Where does the ordinary business income get entered on the 1040 individual return, under other or wages tips?
Line 1 ordinary income passing through from an S corporation K-1 is generally reported on the Form 1040 in Schedule E Part 2. Shareholders that do not actively participate in the S corporation may need to complete Form 8582 with their Form 1040. The IRS also added Form 7203 for basis calculations.
Hello ,do you have any video ,where you explain how to fill 1120-S tax form when the company has no activity all your, 0 income...???
If you have zero income and expenses, you can still follow the tutorial in this video, you just wouldn't have any dollar amounts on the forms, but you still need to include all of the required schedules and K-1s.
Thank you fir this great video. Is it OK to net capital contributions with distributions?
Good question! You do not want to net contributions and distributions. These amounts should be separately stated on the Schedule K-1 and the shareholder basis worksheets. On the IRS Form 7203 included with the shareholder's Form 1040, there are separate line items for the amounts of capital contributions (Line 2) and capital distributions (Line 6).
@JasonDKnott and on the sched L, should we put the capital contributions into APIC and the distributions into retained earnings?
Thanks, very informative 👍
Questions. I thought meals were 100% deductible this year, right?
Why do you call dividends to shareholders' distributions? S corp doesn't pay dividends unless the entity has converted from c to s corp
Yes! Some meals expenses were increased to 100% deductibility temporarily, but some still remain 50%, so carefully assess what types of expenses you have. Cash payments to equity shareholders are referred to as cash distributions for an S corporation shareholder. See line 16 code D on the K-1s
Very helpful. Would love to see some videos about stock basis calculations as well as tax forms when having a loss for the year. Thanks for putting this out there!
We will add it to the list!
I’m an LLC SCorp. 2021 was my first year as SCorp. If I have to fill out 1120S manually, what should I do with my 2021 TurboTax Home and Office edition once we are done with all the tax filings which includes Schedule C? In other words, once I efile my complete returns, my Schedule C gets submitted to the IRS electronically altogether.
Confused….
An LLC taxed as an S corporation must file its own tax return (Form 1120-S). Once the tax return is completed and filed, the individual shareholder uses the information on the Schedule K-1 to complete their own personal tax return.
@@JasonDKnott Hi Jason! Thank you for your reply. Yes, I understand that I need to file 1120S.
My point was that when I purchased the 2021 TurboTax Home and Business edition, I thought that doing Schedule C, I can easily convert over to 1120S with a click of a button when done with Schedule C. This is not the case. In order to do 1120S form, I have to download the 1120S form and manually input the information. Or, in order to do 1120S, I have to buy Business TurboTax which has the capability to do 1120S.
So now that I have completed Schedule C on my TurboTax, wouldnt my Schedule C gets submitted electronically along with my other forms and 1040 by April 15? (Yes, i know i have to submit my 1120S and K-1 by March 15…)
Since this is my first time doing 1120S, I am thinking that i should not have bought TurboTax Home and Business edition if I have to do 1120S manually on the form, Perhaps I should have bought the simple Deluxe version instead
@Sixties No. From experience, buy the TurboTax for SCorp. Then, buy the TurboTax Deluxe for personal filing. You will not need to do Schedule C.
The temporary exception allows a 100% deduction for food or beverages from restaurants, as long as the expense is paid or incurred in 2021 or 2022.
This is great tutorial! Can I have the related forms/docs in addition to the 1120S like Schedule K-1 Distribution Information that you show detailing the entries? Thanks.
Why did you distribute only $2000? Why left $23595 in the business account? How are shareholders supposed to pay taxes on that money if they don't have it in their own personal accounts?
Hello Jason how do you handle a the balance sheet for a new quick serve restaurant that i opened in MArch of 2023. Gettting lost of the opening part of the taxes Any suggestions for another Video or where to get help I do my own taxes and have always. this one has me stumped thanks for the info Great video
pls teach how to report RMD? the amount on 1099 seems to be smaller than the amount on 5489, why? tks!
thank you very much.
You are welcome!
Thanks for posting this tutoria Jason! It's very helpful. I opened S-corp last year but without any income/activities.
Wonder a) do I need to include Schedule B? b) where to find the shareholder's Basis Worksheet you covered around 31:00? and c) if you have the sample return you went over online that we can download for reference?
One other question, could you provide a pdf link so I can print all the forms in this video? Thankyou!
We’re do you find the federal supporting statement form?
please explain form 600S FOR GEORGIA
Thank YOU SO MUCH Jason for doing this - what about if i did nt have payroll service during 2021 for my Scorp? Now how do i do it?, Thanks
Glad it was helpful! If you don't have payroll setup for the 2021 tax year because you have no employees, then you don't have any payroll expenses to deduct on your return.
@@JasonDKnott thank you for your reply. What about I didn’t do it. For myself.😕😕
As a new small business owner, this video was a life saver. I spent hours of research before finding your video. THANK YOU!! I do have one question, my LLC (S-Corp election) does not have stock, nothing mentioned in my articles of organization. This was done based on a recommendation i received from a CPA (who i am not using anymore due to other mistakes). It is owned by two individuals with 50% ownership. So how do we fill out K-1?
Hi, did you find the answer on your question? I have the same issue with LLC's stock
@@nadname5291 Not yet
Great timing and I just subscribed to your channel. I set up an S-Corp last year and trying to fill out the 1120-S the very 1st time. This video helped me tremendously . I have a question: Where do I report the investment/capital I put in the company on Schedule L? Do I put it under Capital stock (line 22) or Additional paid-in capital (line 23)? Thanks.
Generally, there is an amount on the capital stock line equal to whatever was stated in your company Articles of Incorporation. So, how many shares were issued and at what par value. Any cash paid for the shares in excess of par value are reported as additional paid in capital.
Hi Jason,
This was super helpful. Since meals are 100 percent deductible 2021 and 2022 (if purchased from restaurant) we wouldn’t have to adjust 50 percent for that right?
That's correct. The government has temporarily allowed a 100% deduction for certain types of meals expense, but there are still types of meals expense that are only 50% deductible, and entertainment expenses of 0%. So need to carefully assess what types of meals expense you have
Thanks Jason for doing this - It was an excellent refresher for me and I learnt a lot. Can you please post something around reporting of PPP loans and forgiveness reporting on 1120S. I'm sure there are many small S Corps looking for help in reporting these correctly on their 1120S tax returns
Thanks for watching! I'm glad the video was helpful. Yes, we can certainly add a video for reporting the PPP forgiveness amounts.
Okay so I have a couple simple questions. This is thee last year I’m doing my own 1120-s as next year will NOT be as simple as this year and last for me and I’d rather have an expert be able to take advantage of all breaks and options. So, this year I had 0 revenue and a small amount of expenses. I’m an owner/employee and chose not to pay myself. So this 1120s should be almost full of zeros and only a handful of places where I put deductions for expenses. I should only be entering numbers for deductions (19,20,21) and schedule k (1) and not entering anything for schedule L, M-1 or M-2?
The Schedule K-1s should always be completed for each shareholder, regardless of income or expense. Technically, the Schedule L isn’t required unless the company has assets and revenue over 250k, however, our recommendation is to always complete Schedule L, M1 and M2.
@@JasonDKnott unfortunately I’m back again. I’m just confused by all of this. It’s just me on the business (S-Corp)…. I’m using TurboTax but do I still have to submit my 1120s and schedule k-1? I’m an s-Corp owner, work for free and have a day job.
Hello Jason - Thanks a lot for posting such a nice info. Appreciate your help.
Glad it was helpful!
I have never used a S corporation i opened back in 2016 and I am starting the dissolution process. Do you have a video on how to do this process when a company has made zero in the year and owners want to closed it ? Because we never use it I believe that the whole form can just be zero...right?
Unfortunately your situation might be more complicated. if you had an S corporation since 2016, arguable every year the entity has been in existence it should be filing a Form 1120-S, which means you have multiple years of late filed returns, even if all of the amounts are all zero. If you haven't been paying the annual state fees to keep it open, I would check with your state registrar first and see whether the entity was administratively dissolved, and if so, what year was it closed.
@@JasonDKnott I actually did called them and asked them if i had to file every single return and they said no only from the opening of the business which it was in september 2016 till August 2017. I already paid the penalties for that specific year so in this case they told me to file for that year and put in the for "final return" but I am concerned about how to fill it accurately. Even if its all zero there still a few boxes that I do not understand. so can you make a video in how to fill the returns when the corporation has not been used? I think it will help a lot of people. Thanks
If you are filing an SCORP and a K-1 and are the only member of the SCORP, do you also have to file a 1040ez?
The Form 1040 filing obligation is for the U.S. persons who are shareholders in the S corporation. A Form 1040 filing would include the information reported on Schedule K-1.
@@JasonDKnott does the 1040 include only salary, does it exclude distributions?
This video clarified a lot of doubts I had in regards to 1120-S, thank you very much, I will be able to complete my 1120-S.
Glad I could help!
Wow, you are brave to complete your own taxes!
Hi Jason. When figuring line 12 would that be the amount you have paid using forms 941 to IRS and to the state of Florida using RT6?
Generally, yes. But it can also include other types business taxes and licensing fees, such as state franchise taxes and fees.
@@JasonDKnott Thank you. I am a nurse and I did home health this year between hospital employment. I received advice from other 1099 nurses to incorporate and did so but not until September. I had been a 1099 since June. I am trying to use turbotax to assist with filing the 1020-s but I listed my business as receiving income from June-October and my incorporation date as September. Now I am getting an error message from the software stating that "You have entered an effective date of S election that is later than the beginning of the tax year. Is this a problem and what do I need to do?
28:46
17:45
Gracias muy bien explicado muchas gracias
You're welcome!
This video is for year 2021 and says the Meal deduction was reduced to 50%, but it should be 100% due to the temporary allowance per IRS Publication 463: "50% limit on meals. You can figure your meal expenses using either of the following methods.
• Actual cost.
• The standard meal allowance.
Both of these methods are explained below.
But, regardless of the method you use, you can
generally, deduct only 50% of the unreimbursed
cost of your meals. However, you can deduct
100% of your meal expenses if the meals are
food and beverages provided by a restaurant,
and paid or incurred after December 31, 2020,
and before January 1, 2023"
Hi Jason,
I apologized if I keep coming back to you. I am your student and learning as much as possible.
I completed my 1120S. I need help in interpreting my K-1 from my TurboTax
Line 1 is my Ordinary Business Income: $XX
Line 15: Items affecting my shareholder basis:
a) $YY with a code B. (this $YY amount is my PPP forgiven loan)
b) $ZZ with a code D. (this $ZZ amount is my distribution)
Since I haven't started on my 1040 yet, what do the 2 Lines 15 mean? Will I have to pay for a) and b) in my 1040 as part of my income tax which includes the Line 1? Or, is it just an FYI to the shareholder (myself)? TIA
Thank you so much for this video!
You are welcome!
I have a question for you please. My husband owns a trucking single-member LLC taxed as an S-corp. His LLC received a 1099 Misc from the trucking company with which it's contracted. My husband considers himself an employee and he wanted to issue a W-2 form for himself. We are stuck on the 1120-S form. This is our very first year filing taxes as an S-corp. We don't know what to do when it comes to K1. And also, when it comes to the per Diem and where to include it.. any information will be so helpful.
Thank you so much for this video. It is hard to find a great video like this.
A quick comment and a question. Comment:If you plan to update this video, one section that needs some explanation is 'Tax and Payments' section on Page 1.. I am guessing it is skipped because SCorp is a pass through entity and no hence no entries needed.
My question is line 23a a place to enter the estimated tax payments, i.e all the the emploee withheld IT and FICA tax?
Thanks for sharing this information.
Thanks for watching!
Jason, thank you for the concise explanation of the 1120S. I struggle with inputting the proper amount of wages and payroll taxes from the W3 and the W2s. The books are not always accurate according to the W3. Do you have a video covering that and the proper steps to report it accurately?
Jason, if the M-2 line 8 is the exact same number as line 2 and line 6, then when the line 2 income is passed through to a single shareholder via K-1, how does line 8 get reduced back to 0 for the next year? Wouldn't line 8 be the next year's line 1?
Thank you. What software do you use in the video?
We prepare our tax returns using Drake Tax Software.
@@JasonDKnott , thank you
Thank you very much!
You're welcome!
This is very helpful thank you.
Question an scorp can own an scorp if it owns 100% of the stocks (please correct me if I'm wrong).
Would both s corps file 1120S? Does the owned scorp issue a k1 to the owner s corp? Thank you
Appreciate your video SO much! Question, the Balance Sheet has A/P on it, however this is a cash based business as marked on the tax return. Or can you have an accrual balance sheet and a cash basis tax return? Can you explain that to me?
Hi, what software do you use for taxes? Thanks
We use Drake Tax to prepare our tax returns.
Thanks. Another question: do you give Income tax classes?
Great explanation. Should we fill out all schedules of this forms for 2021 or just just first page?
We made S-Corp in April 21 and was no activities since that time and no bank account... Thank you !
This was a clear and concise breakdown of this form. Would love to see a complex example in the future 🤓
I have an llc taxed as scorp. 100% owner..what do I enter for schedule L capital stock question since being llc no shares were issued
You should start writing books about taxes. you are the best, the way you explain things is so sample anyone can understand it. keep up the good work and thank you
Hey Jason. Am I able to put the fuel expenses for the business during the year in the Other Deductions line 19?
Jason, when I convert from a sole proprietor LLC to an S-corp, do I have to go to the State and change my charter?
Hi Jason this is Ximena tax preparer en MD i really love the way you did. Thanks!
Thank you so much for this video, you explain the process in non-cpa terms.
Tutorial please for form, 1003, 1008, 1004,
Great video thank you 🙏
wow great video
Thanks!
@@JasonDKnott Client received 20k from sba EIDL , but 10k is a loan the other 10K is nonreimbursable. Where in this 1120s we need to put them?
Thank you Jason
I subscribed your channel. It is so helpful to figure it out when I do the tax return.
Thank you very much!
I give you the thumbs up 👍!
Glad it helped!
do i fill in lie 4 in the schedule M-2 since I have a loss verses income? also I have no share holders I am the sole member of my S corp
Yes, the profits vs losses are separately stated on M-2. If you have a loss on Page 1 of the Form 1120-S, you report that on Line 4 in M-2. If you have profits on Page 1 of Form 1120-S, those amounts are reported on Line 2 of M-2.
Hi Jason. Your video cleared a lot up for me. Can you suggest an entity that supports the 1120S forms so I can prepare my return. I see lots of tax software that I can purchase that can do the job, but I don't have those types of funds right now. I already know Tax Slayer cannot as well Freetaxusa. Do you know of one?
Thank you for your assistance.
There are a lot of good tax software products. This video tutorial was prepared using the Drake Tax Software, which I highly recommend. The most popular ones in this space are TurboTax, Taxslayer, H&R Block, Jackson Hewitt, TaxAct.
@@JasonDKnott ty. I actually used Taxact. I am in the market for a software to purchase for next year. I will have 3 S corps to prepare for that year
Hey Jason,
Let's say the S-Corp is a 1-man-business, and is allowed to issue 2000 shares. Does the director of the company need to issues some of those shares to himself after starting the S-Corp, or are the 2000 shares already his since he's the director and the only individual involved in the business?
You want to check your organizational documents. Shares in a corporation are never issued automatically, as corporations must follow certain corporate formalities. For closely held companies, you generally see some form of board resolution to issue stock to the shareholder.
@@JasonDKnott Thanks for the response Jason. Is there a specific form to do this, or is just a self-created contract/form?
Hi Jason, when will you be doing the deep dive into the Form 1042 preparation?
It is on the list! Should be posted in the next few weeks.
@@JasonDKnott Excellent, thank you
Hello, I have a question if the owner is paid cash, he did not have a w2, where do I put those cash salaries of the officer, does it go on the 1120s? Or do you have to fill out an additional form?
Cash wages paid to an independent contractor as generally reported as an other deduction on Line 19 of the Form 1120-S. The recipient would have to record the earnings as self-employment income on their tax return, which is subject to federal income taxes as well as federal self-employment taxes.
@@JasonDKnott the payment was made to the owner and not to an independent contractor.
the owner paid himself with bank transfers not with W2
That is my question if the owner paid himself with bank transfers, is this declared on the 1120S or not?
@@JasonDKnott I need to clarify this doubt.
I would appreciate your help