advice on LLC files status S corp

[perrytime]

Kinda took my eye off the tax implications this year, big jump in income. I am self employed, a contractor that gets 1099 statements. My question is, is it too late in the year to become an llc, and then set it up to file as an s corp, and have all the years income attributed to s corp even though checks todate have been made out to me. If not, then I will just hope same good fortune next year and then be on top of it. My goal in this move is to shelter several 10's of thousands of dollars from Social Security tax. Yes i know i have to pay myself a reasonable rate.
thanks for any help.

[perrytime]

well no sooner did i post this than I searched the web with a different question than i had been doing, and seems the answer is no. Form 2553 needs be filed early in year.

Sound right?

[dallas27]

I would think the transaction dates would have to be after the incorporation dates to survive an audit. But really i do nit know, i would ask my accountant, and suggest you get one if you plan to form the llc.

Fwiw, i co-own a llc-s with my wife and shelter the 25% that you are speaking of. Unless you are meaning profit/k-1, we don't recognize much profit.


Sent from my iPhone using Early Retirement Forum

[Texas Proud]

It is not profit that you are sheltering.... you have to recognize the profit of the Sub S in your personal tax return anyhow....

I think what OP is trying to shelter is SS and medicare taxes..

S corp FAQ: How much tax can S corporation save shareholders?


The thing that you have to remember is to pay yourself a reasonable salary... that is where most people mess up with the IRS... you cannot make $200K in profit as the only employee of an S corp and decide to pay yourself $10K... but, if you want to play the tax audit roulette, go right ahead... you might win.....

[dallas27]

You can absolutely avoid FICA (~15%) by recognizing profit. Also by company matches contributions.


Sent from my iPhone using Early Retirement Forum

[Texas Proud]

Quote:

Originally Posted by dallas27 You can absolutely avoid FICA (~15%) by recognizing profit. Also by company matches contributions. Sent from my iPhone using Early Retirement Forum

Not actually sure what you are trying to say... I had said that you could avoid FICA... but not shelter profits... which is true...

I assume that the matching is related to a 401(k) that the corporation might have... that has nothing to do with a Sub S... you can get the same benefit with a Sub C....