Form 1120S) income. Can we report it on schedule C (Form 1040) and pay SE tax.?
The person who told you in this forum that you could put that on Schedule C is notorious for giving bad advice. ‘The tax lady’ on the other hand is noted for near perfect advice and I can’t honestly improve on hers here, save to say that the tax year 2006 deadline for getting wage credit with the SSA is April 15, 2010 so you REALLY need to get cracking on fixing this.
No, you cannot fix this by doing a schedule C. You go back, issue yourself a salary for every year you’ve done work for the S-corp, issue yourself a W-2, amend the 941s, amend the tax returns (both the 1120s, the k-1, the 1040) and do this properly, And for 2009, the deadline for doing this is 4/15/2013 if you want credit over at the SSA. The IRS is finally managing to do payroll audits of S-corps and force people to do it correctly. Repeat, at any time the IRS can come in and do a payroll audit. If you are not paying yourself a salary, they can and will recharacterize all of the $25000 as wages and assess the extra tax and penalties appropriately. You MUST fix this.
