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Thread: S-Corp Drama

  1. #1
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    Default S-Corp Drama

    His brother. For the past 5 years, we’ve had profits flow down to our personal taxes – we pay taxes on 50% of the profit that shows up on the K-1. Each year, the impact of this gets a little worse for us (DH and I). This year, it more than doubled. They do not file quarterly (no idea why) and the accountant tells me they ‘can’t estimate profits to do that’.

    My DH is mostly the worker while the brother in law (who is a piece of shit) runs the financial part of the business. My DH draws a very modest salary. I make almost double what he draws. Between my salary, his salary, and the profits, we are in a very high tax bracket. His brother draws the same modest salary, and his wife works maybe 1 day a week as a massage therapist (she rents a space at the massage place and runs I guess her own business so she has some right offs to offset her small salary). Because their tax impacts are nothing compared to ours, this issue has been festering for years. Each year, it gets worse and the resolve is to up our (DH and mine) percentage of taxes we have withheld from our paychecks each week. This is just a short term fix for a really long term bad problem.

    I am so angry over this because my DH needs to put his foot down – in the past, I’ve gotten advice that the company should be paying quarterly taxes and also both owners should get some sort of bonus or ‘dividend’ quarterly applied to taxes – because this has no impact to my brother in law, he simply doesn’t care. And my DH won’t put his foot down. We have the money, but every year this is getting worse.
    A&K 05.18.02
    Baby Girl 09.06.05... Angel Baby Oct 2007... Baby Girl 10.21.08
    Be kinder than necessary, for everyone you meet is fighting some kind of battle

  2. #2
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    Wait? You don't pay quarterly taxes? Wow. That must be a huge bill. My accountant indicated that could also open you to audits or more.

  3. #3
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    Quote Originally Posted by kindermom View Post
    Wait? You don't pay quarterly taxes? Wow. That must be a huge bill. My accountant indicated that could also open you to audits or more.
    Nope. This isn't my business. It is a huge bill. Over 20k. I am pissed.


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    A&K 05.18.02
    Baby Girl 09.06.05... Angel Baby Oct 2007... Baby Girl 10.21.08
    Be kinder than necessary, for everyone you meet is fighting some kind of battle

  4. #4
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    Default

    Yep, we didn't par quarterly and had to pay $18k one year - our accountant told DH he had to pay quarterly from now on - an estimate is just that. If they over estimate and pay a little more then there would be a refund if they don't pay enough then you know. But, I'm sure you know that! Seriously, your DH really needs to put his foot down. Do they 1099 him or give him a W-2?

  5. #5
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    He gets a W2. And the profits show up on the K1.


    Sent from my iPhone using Tapatalk
    A&K 05.18.02
    Baby Girl 09.06.05... Angel Baby Oct 2007... Baby Girl 10.21.08
    Be kinder than necessary, for everyone you meet is fighting some kind of battle

  6. #6
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    Default

    My LLC made that mistake once. I got a 19k tax bill and a lecture from my accountant.

  7. #7
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    I'd be upset, too. My DH is self-employed and our tax bills are gross and we already pay quarterly so I can't even imagine.

    Maybe try approaching your DH in a different way to get him to see the light. Explain to him that by him not standing up to BIL and having the taxes done quarterly what it's essentially saying is "keeping the peace" in THAT relationship is more important to him than keeping the peace in YOUR marriage. That's not okay.
    Loving my DDs and DS

  8. #8
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    Can't your DH make estimated quarterly tax payments for your household's joint return based on anticipation of earning a portion of partnership income? Or is it that the income is too unpredictable to determine?
    She'd be his wife and make him her husband 5/03Ds1 12/22/09...Ds2 8/31/12

  9. #9
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    Your husband can make estimated quarterly tax payments regardless of what he or his brother decide. No one can stop him from doing that. Literally you google the form (which is a payment voucher), print it, fill it out and attach a check and mail it in. Additionally, you could up your withholdings from YOUR salary (since you file a joint return) to avoid penalties and interest.

    To avoid making quarterly estimated tax payments you need to either owe less than $1000 total for the year (fat chance of that), or have already had 90% of what you owe for the current year withheld.

    I think this vent is more about the frustration of poor planning and communication, but I just wanted to post some practical tips on how to avoid this issue going forward.

  10. #10
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    It is a vent. We actually have much bigger problems (communication being one of them) and it is all coming to a head.

    I am likely heading for divorce and I am scared. Scared for my kids and myself.


    Sent from my iPhone using Tapatalk
    A&K 05.18.02
    Baby Girl 09.06.05... Angel Baby Oct 2007... Baby Girl 10.21.08
    Be kinder than necessary, for everyone you meet is fighting some kind of battle

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