Sub S 941 filing on shareholder payroll
Can you confirm whether a Sub S Corporation paying wages to a sole shareholder (no other employees) has to withhold and report federal tax liabilities against wages paid the shareholder. Or, can they only withhold and report Med & SS. I have a client who's CPA has suggested she withhold and report 4th Qtr Wage & Earnings on Med & SS, not Fed Tax and pay the liability upon filing the 4th Quarter 941, Jan 2012. The Federal Withholding would be paid as an estimated payment by April 2012. Prior to 4th quarter 2011 the individual reported as a sole proprietor of an LLC and only repoorted and paid estimated taxes 2nd & 3rd Qtr. The LLC elected to be treated as a Sub S October 1 and the CPA advised reporting $30K in salary for 2011 reporting only the Med & SS in January 2012. The way I interpret the obligation of the Sub S toward withholding is Fed, SS & Med to report on the 941.