A wholly owned C corp with no salary?

[Skate1968]

Can the active sole owner/officer of a profitable C corp take money out and then not file a 941? I think not! I think this person has to file payroll tax returns-- even if they are late.

This busy electircian needs to do a 2006 payroll. Paying a dividend is not an alternative to reasonable salary, right?

I know 'reasonable salary' is not scrutinized as it is in an S corp.

Could someone please confirm.

thanks

background:

http://www.thetaxbook.com/forums/showthread.php?t=4841

(This guy might just shop around for a cheaper preparer, in which case he'll no longer be my problem.)

[OldJack]

>>Paying a dividend is not an alternative to reasonable salary, right?<<

Wrong! Its the other way around with a C-corp, the IRS is concerned with paying too much salary instead of taking taxable dividends. Paying salary avoids the double tax as the C-corp gets a deduction for salary whereas they get no deduction for taxable dividends.

The best tax planning for a C-corp is to balance the income tax brackets with salary to bring down the Corp tax rate to a reasonable tax bracket (15%) and then dividends for the maximum 15% personal tax bracket.

[Skate1968]

This guy's wife said she found someone who'd do 1120s for 125 each. That's kind of like if I said "I found someone who'll take my appendix out for only 600 dollars!"

I've heard an accountant once refer to the Kendall oil man commercials. "Pay me now or pay me later."

[Skate1968]

Again, thanks very much, Jack

Glad you posted.