Question

Should I file form 941 as S Corp for Q1?

Forum|Forum|5 years ago
June 6, 2020
1 reply
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Hey everyone!

I am a new LLC (incorporated last August) that elected S Corp status a couple months ago when I filed my 2019 return. I am very new to being self employed and didn’t pay myself a wage in 2019 or up until now in 2020, but I did pay for my family’s health insurance premiums through the business. I will be paying myself a salary this quarter 2.

My question is the following: Do I still need to file a form 941 for Q1 even if I didn’t pay myself a salary and thus don’t owe Federal Income Tax, Medicare Tax, or Social Security Tax? I understand I would be very late in filing it but do I still have to?

My second question: Can I file form 941 for Q2 (I shouldn’t owe more than $2,500 in taxes) in a few months and not get in trouble for not filing anything for Q1?

I really appreciate any help! I’ve been trying to find answers to these questions for days and cannot seems to find anything that answers my concerns.

Thanks in advance!

Not A Product Question

Carl11_2

You are required to file the 941 for any quarter that you paid wages to a W-2 employee - and that would include yourself since the owner of an S-Corp can also be a W-2 employee of that business. Unlike the RMD you are required to take each quarter, I would expect you to be a W-2 employee if you are also drawing a salary, or will be drawing a salary.

E

equimenAuthor

Carl,

Thanks for the prompt reply!

To explain myself better, I haven’t taken a wage yet but will in this Q2. Therefore, I know that I’ll have to file the 941 for Q2, but my question is the following: Even though I haven’t paid myself yet since incorporating, do I still have to file form 941 for Q1? I wouldn’t be reporting any wages on there. The only compensation in Q1 was health insurance premium paid by the business for myself as my own employee.

Thanks again for any help!

Carl11_2

Since the health insurance premium you paid in 2020 will be shown on your 2020 W-2 when you issue it next year, in box 12 with a code of "DD", you did receive compensation in Q1. That compensation will be a SCH A deduction on your personal return. While it's a deductible expense for the S-Corp, it will only be a deductible expense for you on your personal return if the total of all your itemized SCH A deductions exceed your standard deduction. Chances are greater than 10% that won't happen, unless you have something such as a catastrophic and costly medical situation.

Now while you don't have to file the 941 for Q1, I would suggest that you do even if you only send the IRS $1. This is because at tax filing time your income is initially treated "as if" it was spread out over the entire 12 months with 1/4 of it received in the first quarter. With no 941 payment in the first quarter, it will be assumed you failed to pay first quarter and a penalty will be assessed.

But to work around that so no penalty is assessed, you would have to annualize your W-2 income and break it down by quarter. With $0 taxable compensation in that first quarter, that would eliminate the penalty. But why create additional paperwork for yourself at tax filing time? It would be simpler to just submit a 941 for that first quarter showing only your non-taxable compensation (which is the employee side of the insurance payment withheld from your W-2 pay) and the taxable compensation of $0, along with a payment of $1.

This way, the IRS already has the quarterly breakdown of taxable compensation on file before you even file the 2020 tax return.