S-corp and audit

[ChEAr$]

I think the gross would be $10,828.37, with $828.37 being the SS/MED withheld.

You take the net and divide by .9235. I use that formula for some farmers who just issue "net" checks. They don't have a calculator with them in the middle of a pasture or field when the checks are written while sitting in the front seat of their pickup.

That's correct, at least in Texas! (grin

In states with income tax however, e.g.Alabama, you want to make sure there is some
state withholding, and then, why not also factor in some federal as well? Might help
reduce penalties for underpayment as the case might be.

And the higher the gross, the less likely IRS might look askew at the sufficiency of wages.
After all, the income results are a wash on the 1040 with wages from an S corp.

For example, I might recommend to client it be gross of about 18,000 with FICA on that
and split the federal and state withholding between the difference with net pay.

Depending of course, have to look at each case separately.

[JON]

Services preformed

and profits made and no salaries-or payroll tax returns, because it is stockholder only person involved corporation. Look out then come the reclass to salaries ( if profits and distributions) taxes and penalties for failure to file, failure to pay, plus interest. The 2003 audits produced some of those stories. Argue all you want about salaries-just make sure you have a reason or correspondence with the client telling them they are wrong with potential problems listed.

[BHoffman]

Jiggers and Harlan - (blush) hahaha! Yeah, the net to gross is calculated the same way in AZ.

So far, I'm under the impression that the consensus is that one paycheck at year end is OK, or at least common practice? Should say, at least in Texas

[Gretel]

Yeah, everything is bigger in Texas. I hope the paychecks too.

(Sorry, couldn't help myself)