Sch C 941 and no W2

[Possi]

My client runs a construction business, Sch C.

He paid his wife 2080.00 and filed a 941 for the 3rd quarter that reflected SS and Medicare only, no "withholding." (He only paid her for 4 months.)

He filed no W2.

What is the best way to handle this? Either I file an amended 941 for zero wages paid, or I need to file a W2 for her.

Oh it gets worse. Now I see that the payments to wife were over 2 quarters, and the 941 is for 1 quarter. There is Virginia tax withheld, Federal tax withheld, and I have no idea whether or not Virginia was paid. I see the 941 for Federal that reflects only FICA paid.

geeeeez....

[JohnH]

Since it's his wife, and the amounts are small, and assuming they're filing a joint return, why not just prepare a w-2 that conforms to the 941 and be done with it? There won't be any penalty for the late W-2.

If there's any difference between the gross and net (after withholdings), just treat it as misc erroneous withholding and refund it to her by writing a check to her now.

Then give him a firm slap on the back of his head and tell him never to do this sort of nonsense again.

[Possi]

done!

Since it's his wife, and the amounts are small, and assuming they're filing a joint return, why not just prepare a w-2 that conforms to the 941 and be done with it? There won't be any penalty for the late W-2.

If there's any difference between the gross and net (after withholdings), just treat it as misc erroneous withholding and refund it to her by writing a check to her now.

Then give him a firm slap on the back of his head and tell him never to do this sort of nonsense again.

Call it "done" and not necessarily in that order...


Thanks

[Jiggers]

[QUOTE=JohnH;126010]Since it's his wife, and the amounts are small, and assuming they're filing a joint return, why not just prepare a w-2 that conforms to the 941 and be done with it? There won't be any penalty for the late W-2.
QUOTE]

There is a penalty for late filing a W-2 and the IRS is issuing those penalty notices.

I am currently working on one, trying to get the penalty abated, but the IRS is very stiff on this one. And in this case the client mailed the W-2's in and SSA didn't receive them. Since it was over a year before SSA and the IRS matched up, the IRS assessed the 10% of the gross penalty. All employees did file returns with their copies of the W-2.

[JohnH]

H-m-m. First time I've heard of them assessing penalties on late W-2's, except for the civil penalty when somebody ignores several notices. Maybe it's because they had to chase the info down???

In any case I don' think it matters, because a 941 has already been filed. May as well 'fess up and send in the W-2, regardless of what happens next. I looked up the penalty, and I think Possi's client is only facing a $60 penalty at most (see page 7 in the attached).l I think exception 2 applies, so we're back to zero if I'm reading it correctly.

http://www.irs.gov/pub/irs-pdf/iw2w3.pdf

Also, I don't see a 10% of gross penalty for your client. The most I see is $100 per form for basic negligence, unless he comes under the $250 per form category. Not sure I'd want to be involved in one of those...