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S Corp Formation/Opperation

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  • S Corp Formation/Opperation

    Hello! MS3 married to realtor here, as a realtor my wife is taxed purely as a 1099 worker so we are paying both sides of FICA on all of our income at this point. we are discussing creating an S corp to reduce this liability but have several questions. expected income 2021 around 100k (hopefully). we plan on taking a 50/50 split w2/distribution to keep the IRS happy.

    1. Can you do this without an accountant and/or is it a dumb idea to do it without an accountant. i am fairly financially literate, do our taxes currently, and keep close tabs of our finance/investments.

    2. Can i continue using online tax software (H&R, turbotax, ect...)

    3. What are some good legal resources to summarize what is legally required of the S corp in terms of w2 paperwork, etc?

    obviously the first year of doing a new financial structure like an S corp involves lots of learning on the way, but id like to learn in a way that doesn't involve making the IRS mad at me.

    any other advice/input is welcome! ive learned when it comes to finance the questions you dont know to ask are the biggest deal.


  • #2
    Because of the costs associated with setting up an s corp and doing taxes, at that low a level of income, it's not worth doing an s corp, especially with the qbi deduction.


    • #3
      Really don't recommend you try to DIY s-corp recordkeeping and filing - I have yet to see one prepared by a non-CPA that was correct (actually, plenty by CPAs have mistakes). However, agree with jhwkr542 that this w/n/b a good idea. You are adding payroll and an extra tax return, minimizing ability to contribute to retirement account, and also reducing your section 199a (qbi) passthrough deduction.
      Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087