question for Bob

[theresa d]

Hi bob- i know you're a NY preparer and hope you don't mind a question. Have an S corp client who is on payroll and also takes distributions. Small corp and took $5000 salary and $1500 in distributions. questions- are the distributions included in renumeration on NYS -45 part A line 1-Unemployment insurance? I think they are per the instructions ( NYS 45)- on page 2. What about on Form 940 FUTA tax? I don't think they are as long as he is taking a salary. Just need to confirm my thinking since it impacts on his filings as his salary is under the $8500 & $7000 max for SUI ad FUTA. Thanks in advance.

[BOB W]

Nys/nyc......

Well, I have never done it that way, but NYS UI would assume that his payroll be at least $7,500 and if he a additional profits they would charge him for the maximum subject to UI tax. I always make it a point, if the profit is $8,500 or more, to make his wages $8,500 at least. During the normal processing of the NYS-45 I never consider net profit distribution in any calculation. But like I said above, his payroll is always $8,500 just to keep the auditors away.

I had an audit a couple of months ago where the corporation had no profits for the last 3 years and they forced his PR to $8,500 for each year. He had no PR in those years.

As far as the 940, no I do not include NPD. The 940 runs under the federal rules that talks about W-2s and reasonable compensation. I believe we all know about those rules.

I will review what you are looking at on the NYS-45 because it would make sense for them to look at NP dist as payroll but only up to their threshhold.

[theresa d]

thanks bob

that's what i thought but needed to clarify. i appreciate your quick response.