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Started By
Message
A question for the CPAs on here
Posted on 4/29/16 at 11:59 am
Posted on 4/29/16 at 11:59 am
With regard to student loans, is it possible for an S-corp (only one partner) to pay student loans. I have one friend saying that it is a reasonable expense, because without those loans the business would not exist. And I have another friend that stated that this was not correct and by doing so, it would be inviting the IRS to do an audit of the S-Corp.
TIA
TIA
3
Posted on 4/29/16 at 2:36 pm to gringeaux
nevermind
This post was edited on 4/29/16 at 2:39 pm
Posted on 4/29/16 at 5:00 pm to gringeaux
If strictly following the law, the company would have to include the amount paid on behalf of the shareholder as compensation to the shareholder. That would subject the entire amount of the student loan repayment to payroll taxes. Typically, that would not be a desired result.
Posted on 4/29/16 at 5:13 pm to Poodlebrain
There's no way to categorize it as a distribution rather than compensation?
Posted on 4/29/16 at 6:35 pm to iknowmorethanyou
Deleted.
This post was edited on 4/29/16 at 11:45 pm
Posted on 4/29/16 at 6:50 pm to AmeriKop45
I'm an S-Corp...no student loans however. My CPA said he's never had one of his S-Corps audited. 27 years experience, fwiw.
Posted on 4/29/16 at 7:04 pm to iknowmorethanyou
quote:LINK
There's no way to categorize it as a distribution rather than compensation?
quote:
When reporting the student loan payment for tax purposes, your company must include the amount as part of the employee's salaries and wages on his W-2 form.
Posted on 4/29/16 at 7:52 pm to iknowmorethanyou
quote:
There's no way to categorize it as a distribution rather than compensation?
Poodle knowsmorethanyou on such matters.
Posted on 4/29/16 at 9:44 pm to foshizzle
Yea no doubt. Good try being cute, btw. I just doubt it's a big deal either way.
Posted on 4/29/16 at 10:15 pm to iknowmorethanyou
Thanks guys I appreciate the help.
Posted on 4/29/16 at 11:25 pm to gringeaux
Good question that made me think for a minute.
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