Hi Brian, I graduated college in Dec 19 and got a position as a tax assistant at a local CPA firm specializing in tax. One of our tax accountants quit in early February right when tax season started and they bumped me up to his position. I just wanted to say thank you as your videos have really helped me learn some key concepts and have expedited my learning. I was stuck on ESO's for over a week and you made it super clear for me. Just wanted to say thanks!
Definitely a topic I would look more into before executing, but this seems like a great way to intentionally defer those quarterly taxes, and a method to take advantage of that “interest free loan”.
Hi Brian. If following the method suggested in this video how do we go about making that additional payroll tax payment. Will this be through the EFTPS website, If so will it be under the individual SSN or company EIN? If through the company EIN how will the IRS know the additional tax payment is for that specific individual (i.e. owner)? Thanks in advance!
I don't know if you answer questions on these old videos but I'm a little confused. I have an LLC that I elected to have taxed as an s corp. I understand running payroll for my salary but am I supposed to also be making estimated tax payments on the rest of the company's NOI as well??
So paying the $40k in installment period 4 sends the IRS a red flag that you missed periods 1, 2, and 3 resulting in underpayment penalties. How does paying that $40k through your w2 avoid that red flag? I understand the concept of the w2 reporting annualized finances, but if they could see that you missed 1, 2, and 3 when you reported the other way, how could they not see that you missed all 4 installment periods. It's a tad confusing to me. I love your videos and haved learned a lot from them. Just a suggestion, but It would be helpful if you were able to provide illustrations on some of these topics
I'm in the retail business selling holiday products. Q1-Q3 is red, due to buying inventory. 95% of revenue comes in Q4. Do I still need to make all 4 estimated payments?
This doesn't make sense to me because the estimated taxes are owed on a personal level due to them being distributions. Paying them through payroll means the funds go through the business bank account and will muddy the books and pierce the veil. The only way I see this as being beneficial is if you have been taking too much in distributions throughout the year and want to pay more in W2 wages in order to maximize the QBI Section 199A deduction. Which would actually be quite useful, as not many seem to know or understand optimizing your W2 wages to take advantage of QBI. Assuming you meet the requirements for the deduction, a salary of around 28% of net income is optimal. For example, if you earn 1M a year, you can save 30-40 grand in taxes by paying yourself 280,000 a year on payroll vs paying yourself only 100,000.
Just found out about quarterly payments. SMLLC elected S-corp in 2022. Made no quarterly payments throughout the year because was re-investing into company. I have $10,000 left over at the end of the year. Would writing myself a check with proper withholdings and filing/paying the employee W2 on EFTPS help me even though I didn’t file quarterly estimated taxes?
Hello. I need help with this. My business is an SCorp and I have never paid myself or taken any money out for taxes and unemployment. I knew nothing about this. My tax professional never told me that I needed to do this as an SCorp business. I am so confused and lost and wondering how can I start to run my business correctly. My tax professional uses the 1120 form and that is all that I know. What do I need to do to get the ball rolling? Thank you so much for any help you can give..
Hello thank you for the video and all the info, I have a question my dad has a small business and an s corporation, for the past 15 years he has had the same bookkeeper and for some reason the last 8 years he is getting a penalty for not filling his s corporation file, he had no idea of this since he thought his bookkeeper was taking care of all of this for him, he had no employees for those 8 years but obviously didn’t file since he wasn’t aware of this, now he has over $30,000 in penalties. What do we do??? Thank you
If you pay 100% of your prior years taxes to avoid the underpayment penalty, you will still be subject to interest. Example: 2019 tax owed: $10k. 2020 tax owed $25k. If in 2020 you paid $10k to match your prior year, you will still be subject to underpayment interest on $15k. Is this correct?
Hi Dont Tread. First, if your income is over $150,000 then it's 110% of last year's not 100%. But if you pay-in 100% (in even installments, so it can't just in install 4), then you'll be in safe-harbor so you WON'T be charged interest (underpayment penalty) on the $15K in your example. I hope that helps! Just look up "safe harbor underpayment penalty".
@@clearvaluetax9382 Thank you! Lot of conflicting info online. Example, serbinski accountant states that you would still be subject to interest regardless: forums.serbinski.com/viewtopic.php?f=2&t=124510 Yet this is not shown in pub 505 (Tax Withholding and Estimated Tax).As long as you paid 100% if your prior years taxes you will have NO penalties. The only additional "penalties" are interest if you dont pay your tax liability by Apr 15th.
Hey, thank you so much for the great info. Are there any ways to decrease/avoid underpayment penalty that I can do now ( 2/3/2020) for year 2019? We didn’t withheld enough for federal income tax due to 2 PRN jobs I had from last year. Can penalty be waved if we never have to pay back to federal before? Or can we open traditional IRA ( we both have 401 K through work but didn’t contribute much) to put money there since it is up to 4/15 to be counted for last year? Can it be used to decrease taxable income for last year ? Decrease tax for last year? Any suggestion would be greatly appreciated!!
I plan to pay myself hourly. So if i was making $47/hr in my previous job and thats the market rate, i consider $50/hr to be a reasonable wage. Can you pay yourself like that? This i think is an easier way to pay yourself
I got a Penalty Notice CP162 for my S Corp. from the IRS for filing late. It says I owe $800 due by Feb. 24. I may have (not positive), already gotten an abatement in the past. I filed (mailed) on time for 2017 tax year, but IRS said I didn't. I didn't have proof because I didn't send Certified Mail. I don't remember if I got an abatement or if I just convinced them I mailed it on time. Is there any way to check online? I don't have the $800. Do you have any advice?
The abatement you’re speaking of is the FTA (first time abatement) and if I’m not mistaken there is a statute of limitations on it for 3 years. In other words you can use the FTA again after the statute (3 years) is up - that’s one part. Second, the best way to check and see if the penalty is still applied on your account is by calling them on the number that should be listed in the notice. They can tell you over the phone if the penalty has been abated or you might be able to see if you set up an account with the IRS online. If you haven’t used the FTA before try asking them to abate it over the phone.
No, the depreciation expense deductions begin when you purchase the vehicle. There's a schedule of how much deductions you'll take each year based on the vehicle and vehicle's price. However, if you're using the mileage method to deduct vehicle expenses, then this won't be applicable to you.
Hi, I'm a single LLC elected S Corp late in Jan 2020. I would like to follow your method to back track my tax payment. If so, how do I pay the tax deposit through the W2 pay roll? Do I file the W2 form indicating the tax withhold and then pay the tax through the IRA website under estimated tax category? How do I send the check to IRA?Thanks in advance.
Hi C J, yes you would do as such, however, it would be considered late now because you didn't make the tax deposit for 2019 by 1/15/2020, so you would risk being penalized. You might be able to wiggle out of the penalty with 1st time relief waiver however. But no, if you want to make a payroll tax deposit, you do it under EFTPS with your EIN as a payroll tax deposit (941). It would NOT be a personal estimated tax payment under your SSN. I hope that helps!
@@CJ-mj6hu Basically, you're sending in your taxes through your payroll through your salary instead of as an estimated tax payment. So there would be no 1040 voucher because it's a payroll tax deposit (so a 941 deposit not a 1040-ES deposit). For the waiver, you wait until you get the IRS late deposit notice and penalty and then you request first time penalty waiver. I hope that helps!
You would be deducting the interest and the depreciation deductions. This is called the actual method (deducting the actual expenses). The other alternative is deducting the vehicle expenses based on the mileage method. That's where you get a deduction per mile based on how many miles you drove for work purposes.
@@thejismeisfamily9654 Yes, that's correct. The depreciation deductions are not affected by how much you put down on the car or if payments are still remaining. It's based on the purchase price (not by your equity in the car).
For more information, check out our helpful website: clearvaluefinance.com/
Hi Brian, I graduated college in Dec 19 and got a position as a tax assistant at a local CPA firm specializing in tax. One of our tax accountants quit in early February right when tax season started and they bumped me up to his position. I just wanted to say thank you as your videos have really helped me learn some key concepts and have expedited my learning. I was stuck on ESO's for over a week and you made it super clear for me. Just wanted to say thanks!
Definitely a topic I would look more into before executing, but this seems like a great way to intentionally defer those quarterly taxes, and a method to take advantage of that “interest free loan”.
Awesome. This guy is a genius and to the point 👍
I’M NOT AN S-CORP!! I just love my CPA girlfriend so I have my reasons for watching this!!
Hi Brian. If following the method suggested in this video how do we go about making that additional payroll tax payment. Will this be through the EFTPS website, If so will it be under the individual SSN or company EIN? If through the company EIN how will the IRS know the additional tax payment is for that specific individual (i.e. owner)? Thanks in advance!
I don't know if you answer questions on these old videos but I'm a little confused. I have an LLC that I elected to have taxed as an s corp. I understand running payroll for my salary but am I supposed to also be making estimated tax payments on the rest of the company's NOI as well??
that's my question too.
But doesnt filing on the EFTPS website designate when youre paying those taxes?
So paying the $40k in installment period 4 sends the IRS a red flag that you missed periods 1, 2, and 3 resulting in underpayment penalties. How does paying that $40k through your w2 avoid that red flag? I understand the concept of the w2 reporting annualized finances, but if they could see that you missed 1, 2, and 3 when you reported the other way, how could they not see that you missed all 4 installment periods. It's a tad confusing to me. I love your videos and haved learned a lot from them. Just a suggestion, but It would be helpful if you were able to provide illustrations on some of these topics
I'm in the retail business selling holiday products. Q1-Q3 is red, due to buying inventory. 95% of revenue comes in Q4. Do I still need to make all 4 estimated payments?
This doesn't make sense to me because the estimated taxes are owed on a personal level due to them being distributions. Paying them through payroll means the funds go through the business bank account and will muddy the books and pierce the veil. The only way I see this as being beneficial is if you have been taking too much in distributions throughout the year and want to pay more in W2 wages in order to maximize the QBI Section 199A deduction. Which would actually be quite useful, as not many seem to know or understand optimizing your W2 wages to take advantage of QBI. Assuming you meet the requirements for the deduction, a salary of around 28% of net income is optimal. For example, if you earn 1M a year, you can save 30-40 grand in taxes by paying yourself 280,000 a year on payroll vs paying yourself only 100,000.
When a sole proprietorship switches to S Corp, are all the employees switched to the new EID # of the S Corp from the sole proprietorship?
Hello, I am a bit confused. If the S-Corp don’t pay taxes on income why do they need to pay estimated tax payments?
Thank you for your help.
I don't think the s corp is paying taxes. You as the W-2 from the s corp are paying estimated taxes.
Just found out about quarterly payments. SMLLC elected S-corp in 2022.
Made no quarterly payments throughout the year because was re-investing into company.
I have $10,000 left over at the end of the year. Would writing myself a check with proper withholdings and filing/paying the employee W2 on EFTPS help me even though I didn’t file quarterly estimated taxes?
Hello. I need help with this. My business is an SCorp and I have never paid myself or taken any money out for taxes and unemployment. I knew nothing about this. My tax professional never told me that I needed to do this as an SCorp business. I am so confused and lost and wondering how can I start to run my business correctly. My tax professional uses the 1120 form and that is all that I know. What do I need to do to get the ball rolling?
Thank you so much for any help you can give..
Hey, check out the other video on his channel going over s corp payroll thatll help.
@@jay_torres Thank You..
My tax professional advised me to operate as a s corp I knew nothing about quarterly payroll. I hate being mislead.
@@Krystal_Clear Yes. It's sad when they don't tell you what you need to know..
Tanesha what did you end up doing. Im in a similar situation but with a c corp
Thank you for your videos.
in texas can you pay annually as a S corp? or is it only quarterly
Brian, can I hire you as my accountant? Not sure if you work with NYC people. I have an S-corp healthcare clinic. Thanks
How late can you run payroll for 2021?
What about funding a Sep IRA to reduce k1 income? This will reduce the amount of tax owed thus reducing penalties for estimated taxes.
Christopher, funding of a SEP IRA needs to occur at the business level. You still have until March 15th to do so.
Hello thank you for the video and all the info, I have a question my dad has a small business and an s corporation, for the past 15 years he has had the same bookkeeper and for some reason the last 8 years he is getting a penalty for not filling his s corporation file, he had no idea of this since he thought his bookkeeper was taking care of all of this for him, he had no employees for those 8 years but obviously didn’t file since he wasn’t aware of this, now he has over $30,000 in penalties. What do we do??? Thank you
If you pay 100% of your prior years taxes to avoid the underpayment penalty, you will still be subject to interest. Example: 2019 tax owed: $10k. 2020 tax owed $25k. If in 2020 you paid $10k to match your prior year, you will still be subject to underpayment interest on $15k. Is this correct?
Hi Dont Tread. First, if your income is over $150,000 then it's 110% of last year's not 100%. But if you pay-in 100% (in even installments, so it can't just in install 4), then you'll be in safe-harbor so you WON'T be charged interest (underpayment penalty) on the $15K in your example. I hope that helps! Just look up "safe harbor underpayment penalty".
@@clearvaluetax9382 Thank you!
Lot of conflicting info online. Example, serbinski accountant states that you would still be subject to interest regardless: forums.serbinski.com/viewtopic.php?f=2&t=124510
Yet this is not shown in pub 505 (Tax
Withholding and Estimated Tax).As long as you paid 100% if your prior years taxes you will have NO penalties. The only additional "penalties" are interest if you dont pay your tax liability by Apr 15th.
How much for a quick consultation?
Where is your video about how to know how much to pay yourself through payroll
Need assistance filing a 1065 k-1 for 2020
Hi - is there a way to contact you directly ?
Hey, thank you so much for the great info. Are there any ways to decrease/avoid underpayment penalty that I can do now ( 2/3/2020) for year 2019? We didn’t withheld enough for federal income tax due to 2 PRN jobs I had from last year. Can penalty be waved if we never have to pay back to federal before? Or can we open traditional IRA ( we both have 401 K through work but didn’t contribute much) to put money there since it is up to 4/15 to be counted for last year? Can it be used to decrease taxable income for last year ? Decrease tax for last year? Any suggestion would be greatly appreciated!!
Hi Sunny, I responded to you on my other video. Thanks!
How do you determine payroll for a S corporation if you salary is not fixed?
I plan to pay myself hourly. So if i was making $47/hr in my previous job and thats the market rate, i consider $50/hr to be a reasonable wage. Can you pay yourself like that? This i think is an easier way to pay yourself
Great 👍 info
Thank you Makenzi!
I got a Penalty Notice CP162 for my S Corp. from the IRS for filing late. It says I owe $800 due by Feb. 24.
I may have (not positive), already gotten an abatement in the past. I filed (mailed) on time for 2017 tax year, but IRS said I didn't. I didn't have proof because I didn't send Certified Mail. I don't remember if I got an abatement or if I just convinced them I mailed it on time. Is there any way to check online?
I don't have the $800.
Do you have any advice?
The abatement you’re speaking of is the FTA (first time abatement) and if I’m not mistaken there is a statute of limitations on it for 3 years. In other words you can use the FTA again after the statute (3 years) is up - that’s one part. Second, the best way to check and see if the penalty is still applied on your account is by calling them on the number that should be listed in the notice. They can tell you over the phone if the penalty has been abated or you might be able to see if you set up an account with the IRS online. If you haven’t used the FTA before try asking them to abate it over the phone.
Great 👍
Thank you Makenzi!
Hello I can only depreciate when I pay off my car for example.
No, the depreciation expense deductions begin when you purchase the vehicle. There's a schedule of how much deductions you'll take each year based on the vehicle and vehicle's price. However, if you're using the mileage method to deduct vehicle expenses, then this won't be applicable to you.
This whole thing is so stressful
Hi, I'm a single LLC elected S Corp late in Jan 2020. I would like to follow your method to back track my tax payment. If so, how do I pay the tax deposit through the W2 pay roll? Do I file the W2 form indicating the tax withhold and then pay the tax through the IRA website under estimated tax category? How do I send the check to IRA?Thanks in advance.
Hi C J, yes you would do as such, however, it would be considered late now because you didn't make the tax deposit for 2019 by 1/15/2020, so you would risk being penalized. You might be able to wiggle out of the penalty with 1st time relief waiver however. But no, if you want to make a payroll tax deposit, you do it under EFTPS with your EIN as a payroll tax deposit (941). It would NOT be a personal estimated tax payment under your SSN. I hope that helps!
And I don't need to file any 1040 voucher? And do I have to fill in any forms for the waiver? Thanks for your swift response !
@@CJ-mj6hu Basically, you're sending in your taxes through your payroll through your salary instead of as an estimated tax payment. So there would be no 1040 voucher because it's a payroll tax deposit (so a 941 deposit not a 1040-ES deposit). For the waiver, you wait until you get the IRS late deposit notice and penalty and then you request first time penalty waiver. I hope that helps!
Thank you very much! You're a great help!
If I still make payments on my car 🚘 I can only deduct only the interest
You would be deducting the interest and the depreciation deductions. This is called the actual method (deducting the actual expenses). The other alternative is deducting the vehicle expenses based on the mileage method. That's where you get a deduction per mile based on how many miles you drove for work purposes.
ClearValue Tax even I still make payments on the car
@@thejismeisfamily9654 Yes, that's correct. The depreciation deductions are not affected by how much you put down on the car or if payments are still remaining. It's based on the purchase price (not by your equity in the car).
Confusing the way you’re explaining.
So basically use Gusto, let their software do payroll for you and that would make this video irrelevant?