All Forum Posts by: Jeff D.

yeah, i think i will be going the yearly route and just paying the penalties. ......although if i research correctly those are 100% of payroll tax due if late? But seemed to be less penalties if you are late with your SE taxes. So if i take a $500 monthly/ $6k a year paycheck - taxes would be about 15% or $900 yearly. So I can expect a $900 penalty in that example if I pay yearly?

I just won't keep up with any quarterly stuff - i know already, having been down that road for 5 employees a few years ago. Such a pain. So either I pay the yearly penalty, or hire a bookkeeper - just for one persons paycheck

well in this case its a retail space with lots of very old equipment. like 10-20+ yrs. So because of the age of the eqpt my depreciation opportunities are probably zilch aren't they?

Can an s-corp owner /employee /officer claim an amount attributable to his own labor on a flip to help bring down the taxable profit?

For instance, if he did a portion of the work - perhaps the tile, some painting, cleanup, etc - can he say it's worth $X amount based on what a sub would charge? And then deduct it an an expense ?

Really!? So no requirement to pay a salary atleast monthly?? That would ease the pain greatly. Then I could just do it all at the end of the year (march) - take my 40% min salary in one lump sum out of the piggy bank, do all the payroll forms, send off the tax, take my 60% ordinary k-1 out of the piggy bank, declare it on my 1040, pay the taxes there - done!

Hope you're right! Still not sure about the tax due when earned part though. If you sell a flip in June, you've made the profit in June and therefore technically should pay yourself the salary in June, right?

nevermind - not tangible property so probably not.

...so then what about the cost of the biz purchase itself? Is that depreciable? I know new eqpt is, improvements to the space, and things pertaining to the lease itself. And I know the building is for the landlord's taxes. But what about the biz itself? thanks!

In my case, atleast in the first year or two of flips, I absolutely don't want to have to pay myself a monthly paycheck. That's $ each month out of the account that's otherwise earmarked for project purchase and fixup. That almost like having an additional mortgage payment to make on a project. Additional carrying costs. And if something goes south, that money will be needed. Not to mention the monthly cost of hiring someone to do the paycheck stuff.

So at 120k, going the SE route but paying and filing end of year on everything means about another 10k in taxes and penalties, but if I have 10k in losses and write offs elsewhere, it's a wash, right?

ahh ok - so with:

SE OPTION

120k gets the SE tax of about 12% ($14,400)
+ the ordinary tax of about 25% ($30,000) = about $44,400 total tax

SCORP OPTION

120k gets divided up so only 48k gets the 12% SE tax ($5760)
+ the ordinary tax on that 48k of about 25% ($12,000)
+ the ordinary tax on the remaining 72k of about 25% ($18,000)
= about $35760 total tax

right?

So on 120k, the SE option overall tax would be about 37% and the SCORP option would be about 30%.

So about saving about 7% on taxes or $8400 as you said.

hmmm....

And if a person went the SE route, the SE tax needs to be paid quarterly but the ordinary tax part can be paid at the end of the year - right? So what's the penalty on the SE if not paid until the end of the year? A max of 25% or another $3600?

ok makes sense.........but then what about the other 72k that carries over to the 1040 via k-1? (again, just for simplicity, let's assume this was the only source of income a person had).

So they'd have that 48k they paid about 12% on, then 72k they're going to be paying about 25% on right? So a grand total of $5895 + $18000 = $23895. Which is actually MORE than the total of $14321 going the SE route? .......that can't be right.....so what am I doing wrong here?

I lease a retail space. First year. I put about 20k into remodeling the space this past year. What's the best way to account for that expense on taxes? It's commecial, and I don't own the space, just the biz in the space. Does it work just like a residential real estate where a large remodel to your house is a capital improvement that increases your basis and gets depreciated? Or is it one big one-time write off?