"ASM" <melickas[at]yahoo.com> wrote in message
news:246a0d02.0404090349.4e60a354[at]posting.google.com...
- quote -

You are WRONG in your thinking. As an employee of a corporation you are
REQUIRED to take a reasonable salary. That salary is what will determine
how much money you can put into a retirement plan - depending on the
specifics of the plan you either contribute a fixed dollar amount or a
percentage of your salary.

Your first error was in trying to prepare a pass-through corporate tax
return without professional help. Corporate taxation is convoluted at best
and difficult & complex is more the norm - and that's just form preparation.
Compliance is another whole issue. Then when you add in the pass-through
entity rules it really starts to get to be a REAL JOB. What you think
you've saved by doing it yourself will almost certainly cost you more in the
long run, if for no other reason than you will spend valuable time trying to
keep up with the rules and regulations related to compliance and taxation
when you could be doing whatever it is you do to generate income - and I'd
be that you could generate more than enough extra income than you'd pay to a
good tax pro.

Your second error is in thinking that you use a Schedule C with an 1120S.
The 1102S is a corporate level return, the Schedule C is part of a personal
return. Compensation of Officers on the 1102S should match the amount
reported on your W-2 for the officer - it should NOT go on a Schedule C as
part of your personal return. You are NOT self employed, that is what
Schedule C is for. You ARE employed by the corporation - that you are the
sole shareholder is of no matter for tax purposes.

There are ways you can short cut things. The problems won't come today and
likely not even this year. The problem comes when you get audited and the
IRS goes back as far as the statute of limitations will allow and fixes all
the things you short cut. Or worse, you go along fine for years and years
and get audited 20 years down the road and find out that what you thought
you could contribute to your plan was wrong - now you could very well have
excise taxes plus fines and penalties plus interest due on the excess
contributions.

For you own sake, I strongly recommend you extend your personal return and
seek out a qualified tax professional to assist you. Even if you only use
them once every few years just to make sure what you are doing is on track,
it will be well worth the investment spent.

Good luck,
Gene E. Utterback, EA

I have read IRS pubs & NG threads.

I am the sole-owner of an S-corporaton. I am the only "employee". I
have filed my 1120S. I use Schedule C to determine Net Profit -
obviously! I have money in a money market fund that I want to use to
contribute to a SEP-IRA.

I do not file a W-2. Every thread I read seems to indicate that I have
to use W-2 for salary reporting, but I do not think this is true if I
am an S-Corp -use 1120S and all gross earnings are "pass-thru" to
compensation of officers.

1. Can I contribute to a SEP-IRA? If not, why not?

2. If I can, how much can I contribute? What percent do I take of what
figure (Net profit, Adjusted Gross Income,???)

3. Is it too late if I have not yet filed my 1040 for 2003?

Thanks!