Single Member LLC taxed as S-Corp: Form 1120S, Schedules K/K1 and Form 7203 questions

[mt2k]

Last year I created a Single Member LLC, to be taxed as S-Corp. I used a payroll provider to pay myself a reasonable salary.

Please help in completing the tax forms.
Gross Income: $50K
Salary to myself via payroll: $25K
Taxes: $4K (also includes business registration & setup fee and compliance filing fee)
Other Deductions: $3K (Office expenses etc.)
Net Business Income: $18K ($50K-$25K-$4K-$3K)

I took a distribution of $15K and the remaining $3K is still in the business bank account.

Form 1120S:
Q1. Where to enter the $25K salary, Line 7 or Line 8? I have received a W2 from payroll company
Q2. Where to enter the $15 distribution that I took, Line 7 or Line 8 OR line 16d in schedule-K? For now I am assuming it is schedule-K.

Schedule-K:
Line1: $18K (Same as Form 1120S Line 21)
Line 16d: $15K
Line 18: $3K

Q3. Am I missing something or doing it incorrectly? There are no other deductions or income, so all the other line items are blank.

Schedule-K1:
Q4. What should I write for number of shares in item# D and item# H? There are no shares in my LLC and I am the only member. I have put 100% in item# G.
Looks like Form 1125E also needs this info (the number of shares)

Q5. Line 1 ($18K) and Line 16d ($15K) amounts are exactly the same as in Schedule-K as I am the only member in the LLC. Will I be taxed based on the entire income in line1 or the distributions in line16d?

Q6. Do I have to enter the 20% QBI anywhere in the schedule K-1 or any other form? If so, will it be 20% of the income or the distribution?

Form 7203:
Q7. TurboTax is asking me to fill Form 7203 based on the above Schedule-K1 info. Do I really have to file the form? It's a quite lengthy one and not sure how to complete it.

Thanks for your help.

[MP123]

Q1. Where to enter the $25K salary, Line 7 or Line 8? I have received a W2 from payroll company

Line 7, Officer's compensation

Q2. Where to enter the $15 distribution that I took, Line 7 or Line 8 OR line 16d in schedule-K? For now I am assuming it is schedule-K.

Yes, the distribution goes on K/K1, it's not "compensation" so no FICA is due which is the whole point of an S-Corp.

Q3. Am I missing something or doing it incorrectly? There are no other deductions or income, so all the other line items are blank.

I think you got it.

Q4. What should I write for number of shares in item# D and item#H? There are no shares in my LLC and I am the only member. I have put 100% in item# G.

I would use 100 or 100%.

Q5. Line 1 ($18K) and Line 16d ($15K) amounts are exactly the same as in Schedule-K as I am the only member in the LLC. Will I be taxed based on the entire income in line1 or the distributions in line16d?

You'll be taxed on the line 1 amount. The distributions are important to keep track of your basis, but you're taxed on the profit whether distributed or not.

Q6. Do I have to enter the 20% QBI anywhere in the schedule K-1 or any other form? If so, will it be 20% of the income or the distribution?

TT should be including a Sec 199a statement with a code "V" in line 17 of your K-1. The statement will include the relevant information for your QBI deduction. Or are you preparing this 1120-S by hand? If so, see https://www.irs.gov/instructions/i1120s ... nk10002695.

Q7. TurboTax is asking me to fill Form 7203 based on the above Schedule-K1 info. Do I really have to file the form? It's a quite lengthy one and not sure how to complete it.

Yes Form 7203 keeps track of your basis in the S-Corp. In your case it should be very simple assuming you have no debt in the S-Corp. Most of the lines will be blank because they don't apply.

You would just complete lines 1, 3a, 4, 5, 6, 7, and 15. I think that's it, but not positive. Line 1 would be 0 (first year), line 15 would be $3k, and you'd fill in the other amounts.

You're keeping track of your basis in the S-Corp. This is basically how much money you have in the S-Corp that you've already paid taxes on, and so can distribute tax free of tax. Next year your line 1 amount will be your line 15 amount from this year. So you can take an additional $3k distribution without owing tax (because you've already paid it), although it would exhaust your basis.

Note that 7203 is filed with your personal 1040, not the S-Corp's 1120-S.

[mt2k]

Thank you so much. Your responses are very helpful.

Q6. Do I have to enter the 20% QBI anywhere in the schedule K-1 or any other form? If so, will it be 20% of the income or the distribution?

TT should be including a Sec 199a statement with a code "V" in line 17 of your K-1. The statement will include the relevant information for your QBI deduction. Or are you preparing this 1120-S by hand? If so, see https://www.irs.gov/instructions/i1120s ... nk10002695.

You are right. I am preparing the Form 1120S and the schedule-K1 by hand. So, somehow I have to add the QBI info in line 17 with code "V".
I have to do some research on how to include it. Any help is appreciated.

Q7. TurboTax is asking me to fill Form 7203 based on the above Schedule-K1 info. Do I really have to file the form? It's a quite lengthy one and not sure how to complete it.

Note that 7203 is filed with your personal 1040, not the S-Corp's 1120-S.

Yes. I am using TT for personal tax filing and mentioned I have received a Schedule-K1. Then it started asking bunch of questions and those eventually led to Form 7203.

[MP123]

Thank you so much. Your responses are very helpful.

Q6. Do I have to enter the 20% QBI anywhere in the schedule K-1 or any other form? If so, will it be 20% of the income or the distribution?

TT should be including a Sec 199a statement with a code "V" in line 17 of your K-1. The statement will include the relevant information for your QBI deduction. Or are you preparing this 1120-S by hand? If so, see https://www.irs.gov/instructions/i1120s ... nk10002695.

You are right. I am preparing the Form 1120S and the schedule-K1 by hand. So, somehow I have to add the QBI info in line 17 with code "V".
I have to do some research on how to include it. Any help is appreciated.

Q7. TurboTax is asking me to fill Form 7203 based on the above Schedule-K1 info. Do I really have to file the form? It's a quite lengthy one and not sure how to complete it.

Note that 7203 is filed with your personal 1040, not the S-Corp's 1120-S.

Yes. I am using TT for personal tax filing and mentioned I have received a Schedule-K1. Then it started asking bunch of questions and those eventually led to Form 7203.

An easy solution to both would be to use Turbo Tax Business (not Home+Business) to prepare the 1120S, K1, and 7203. It would also allow you to efile.

[mt2k]

An easy solution to both would be to use Turbo Tax Business (not Home+Business) to prepare the 1120S, K1, and 7203. It would also allow you to efile.

Thank you for your suggestion. Wish I had realize it earlier, for some stupid reason I thought Home+Business is a higher version and I have already bought and installed it.

[MP123]

An easy solution to both would be to use Turbo Tax Business (not Home+Business) to prepare the 1120S, K1, and 7203. It would also allow you to efile.

Thank you for your suggestion. Wish I had realize it earlier, for some stupid reason I thought Home+Business is a higher version and I have already bought and installed it.

I think Home+Business just helps a little more with Schedule C businesses, but even the basic TurboTax will do all the personal 1040 forms including Schedule C.

The one you want for an S-corp, Partnership, or Trust is https://turbotax.intuit.com/small-business-taxes/

[mt2k]

An easy solution to both would be to use Turbo Tax Business (not Home+Business) to prepare the 1120S, K1, and 7203. It would also allow you to efile.

Thank you for your suggestion. Wish I had realize it earlier, for some stupid reason I thought Home+Business is a higher version and I have already bought and installed it.

I think Home+Business just helps a little more with Schedule C businesses, but even the basic TurboTax will do all the personal 1040 forms including Schedule C.

The one you want for an S-corp, Partnership, or Trust is https://turbotax.intuit.com/small-business-taxes/

I ended up buying TurboTax Business to generate From 1120S and schedule K-1 with QBI Deductions (Statement A). The price of this software is very high just to generate these forms. It does not support Personal Returns.
So, now I use the Business version to generate the forms and eFile the forms for the LLC
Home & Business version for Personal Tax returns

[MP123]

An easy solution to both would be to use Turbo Tax Business (not Home+Business) to prepare the 1120S, K1, and 7203. It would also allow you to efile.

Thank you for your suggestion. Wish I had realize it earlier, for some stupid reason I thought Home+Business is a higher version and I have already bought and installed it.

I think Home+Business just helps a little more with Schedule C businesses, but even the basic TurboTax will do all the personal 1040 forms including Schedule C.

The one you want for an S-corp, Partnership, or Trust is https://turbotax.intuit.com/small-business-taxes/

I ended up buying TurboTax Business to generate From 1120S and schedule K-1 with QBI Deductions (Statement A). The price of this software is very high just to generate these forms. It does not support Personal Returns.
So, now I use the Business version to generate the forms and eFile the forms for the LLC
Home & Business version for Personal Tax returns

Yes, that's the way it works unfortunately. But I suppose you could do the corporation returns by hand next year now that you know what they should look like.

[mt2k]

An easy solution to both would be to use Turbo Tax Business (not Home+Business) to prepare the 1120S, K1, and 7203. It would also allow you to efile.

Thank you for your suggestion. Wish I had realize it earlier, for some stupid reason I thought Home+Business is a higher version and I have already bought and installed it.

I think Home+Business just helps a little more with Schedule C businesses, but even the basic TurboTax will do all the personal 1040 forms including Schedule C.

The one you want for an S-corp, Partnership, or Trust is https://turbotax.intuit.com/small-business-taxes/

I ended up buying TurboTax Business to generate From 1120S and schedule K-1 with QBI Deductions (Statement A). The price of this software is very high just to generate these forms. It does not support Personal Returns.
So, now I use the Business version to generate the forms and eFile the forms for the LLC
Home & Business version for Personal Tax returns

Yes, that's the way it works unfortunately. But I suppose you could do the corporation returns by hand next year now that you know what they should look like.

Right. Next year should be okay. Thank you for all your help.

[PC-FI]

I use Taxact to file my 1120S and generate the K1. TaxAct is web based vs TT for Business that is a software download. I then do our personal taxes in TurboTax.