IR4 Question 12 Income from schedular payments
If the company has received any schedular payments, Inland Revenue will send you a summary of income (previously known as summary of earnings).
Add up the total tax withheld and all the gross payments shown on the summary of income and write the totals in Boxes 12A and 12B.
The summary of income form may not contain all the company’s earnings information. If any details are missing, please include them at Question 12.
If the company received a payment with no tax deducted, include the gross amount in Box 12B.
Transferring tax deductions Tax deducted from schedular payments made to close companies can be transferred directly to the company’s shareholder-employee(s) in some circumstances. You’ll need to reduce the amount claimed in Box 12A by the amount of tax deducted from schedular payments which has been transferred direct to a shareholder-employee of the company. You will still need to include the total schedular payments made to the company in Box 12B.
LLC received schedular payments of $10,000 with total tax deducted of $2,000 during the year. The $10,000 is attributable to the company’s shareholder-employee through the attribution rule. LLC can transfer up to $2,000 of the tax deducted from the schedular payments it received to the company’s shareholder-employee(s). LLC transfers the full $2,000 of tax to the company’s sole shareholder-employee. As the full amount of tax has been transferred from LLC the amount in Box 12A should be $0.
If the company is transferring tax deducted to shareholder employee(s) it should attach details of the transfer to the return. The amount of tax transferred from the company to its shareholder-employee(s) will also need to be recorded as a debit entry in the company’s imputation credit account. See IR4 Questions 42 Debits#Question42DOtherdebits.