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I have S-Corp for last 5 years. First few years I used a professional and all went fine; he filed 1120s and 1040 for me. But last 3 years I did it myself and did a huge mistake: I did not file 1120s and filed only 1040 as sole proprietor.

While I am the only employee in my S-Corp, I read that I needed to file 1120s anyways. Can someone please suggest what to do? I still have to file 2015 taxes; should I file them as 1120s?

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If you have an S-Corp, the S-Corp files the 1120S, and you still file a Form 1040 for yourself. Your S-Corp should give you a Schedule K-1, which you will use to complete Schedule E on your Form 1040. You do not file Schedule C because, for tax purposes, you are an employee of the S-Corp rather than self-employed. (The fact that you may own all shares of the S-Corp doesn't matter.)

The deadline for S-Corps that have a calendar year as their fiscal year was March 15, so you're probably already late for 2016 on the S-Corp.

Also keep in mind that the S-Corp is obliged to pay you a wage, so there should be employment taxes involved, which may or may not balance out if you tried to pay self-employment tax via your Schedule C. The S-Corp really should have issued you (and filed with the Social Security Administration) a W-2 for you as an employee each year.

At this point you better get professional help. Probably you'll need to file (late) a form 1120S for all of the missed years, get the corresponding Schedule K-1 for your personal tax for each year, and then file amended personal returns on Form 1040X for each year.

Really, though, better get some help professional help at this point.

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  • So i will have to amend all my taxes i just looked it goes back to 2009? Like 6 years of taxes? I filed all as 1040 schedule C for S-Corp.
    – Gurnor
    Apr 13, 2016 at 19:49
  • @Gurnor My understanding is that, yes, you will need to amend all the way back to 2009. This is not a situation that I've personally faced though, so maybe there's an "out" like statute of limitations that will let you do just the last few years. This is where a professional could give you better advice specific to your situation. I think that since you failed to file 1120S at all, the statute of limitations does not apply (vs. filing it with some error that went undetected for years).
    – user32479
    Apr 13, 2016 at 19:55
  • @Gurnor Also note the penalty gets bigger with time, so act soon. From IRS, Form 1120S: "A penalty may be charged if the return is filed after the due date ... or the return doesn't show all the information required, unless each failure is due to reasonable cause. ... For returns on which no tax is due, the penalty is $195 for each month or part of a month (up to 12 months) the return is late or doesn't include the required information, multiplied by the total number of persons who were shareholders in the corporation during any part of the corporation's tax year for which the return is due."
    – user32479
    Apr 13, 2016 at 20:05
  • @Brick - I was suggested by a consultant. That i should send amended filing saying i closed my s-corp in 2009. And open a new llc now and keep on doing Schedule C. But i have been taking checks on the name of s-corp from 2009 to 2015. Will that not affect anything? Is this the right way to go?
    – NoviceMe
    Apr 15, 2016 at 17:26
  • @NoviceMe That seems suspect to me, but it seems like a legal question of some complexity since it must also tie to how your business is registered at the state level and related state law. I'd say at least that's worth a new question with more details if you want an answer, although it might get flagged as off-topic here depending on what the details are.
    – user32479
    Apr 15, 2016 at 17:30

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