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I can still itemize deductions


I can still itemize deductions  

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Author: Da Tax Man   Date: 2/13/2019 12:34:58 AM  +0/-0   Show Orig. Msg (this window) Or  In New Window

Let me make sure I'm reading this correctly. You are "still itemzing deeductions" through an S corp? 


Does that mean your tax strategy is to turn your employment into an S Corp? 


I can only assume you are a helicopter pilot, so you are most likely receiving wages and a W-2. What business does your S-Corp do? Businesses don't earn wages from their employer. 


You are a contractor, and not an employee?, Alright now were talking. So S-Corp means a Corporation that elected flow through treatment. That means you have to Incorporate, which means file articles of incorporation with your state. Judging by your post, you don't know how to do that so you need a lawyer. There goes any tax savings you thought you had. Annual business license fees, accounting fees, etc. 


If you are a sole owner S-Corp you are required to pay yourself a "reasonable wage".  Your wages are going to be subject to payroll taxes. You are also going to have to file quarterly payroll reports which I assume you don't know how to do so there goes some more accounting fees. Reasonable wages also means that if the IRS determines you lowered your wages to reduce your payroll tax liability that can recharacterize your distributions as wages and also subject you to a penalty.


Assuming you managed to do all this, like you said you would have generated a loss because it was a stupid idea. You elected flow through treatment so the S-Corp doesn't pay taxes, you pay them personally. Trouble is that the loss was passed through to you as passive loss. Your losses are going to be limitted to passive income, and they will not be available untill you produce a profit in the activity. 


 

 
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I can still itemize deductions +0/-0 That GOMer 2/10/2019 1:12:07 PM