K1 INCOME NOT FLOWING TO SCH SE

[Pacun]

I entered all the info on personal return from K-1 (1120-S) but sch SE is empty. Thanks for your help.

[rfassett]

Why would there be SE income from an S-Corp K-1? Partnership K-1 sometimes. But not an S-Corp. BTW, you scared the crap out of me. When I first read your post I thought it said the K-1 info was not flowing to Sch E. I have done a ton of those kinds of returns already and would have had a heart attack if they all missed that.

[Pacun]

Where do I make the person pay SE taxes on the 1040, then?

[fredazcpa]

Earnings from a S Corp are not subject to SE tax, that is why the shareholders, if they are "Working" in the Corp need to be taking a W2 wage and withholding and paying the employment taxes

this is the area that the IRS is looking into, because it is a way (right or wrong) to avoide paying Social Secuirty and Medicare taxes.

[kcjenkins]

To add to Fred's point, the S Corp is often used to 'shelter' part of the income from SE taxes, but that is why the IRS is now in the process of auditing almost all S Corps with significant income but no officer payroll. The whole point of using S corp rather than LLC or partnership is often to allow the owners to take part of the income as 'dividends' rather than pay SE tax on the entire profit. The dividends do NOT flow to the SE, because they are not considered self-employment income, but rather a return on investment. The portion of the income that is from the labor of the owners should have been shown through payroll.