Officer compensation and Form 1120-S

S-Corp has one owner-employee only

Based wages: $50,000
401-K elective deferrals $10,000

Should Form 1120S Line 7 “Compensation of Officers” be $50,000 or $40,000?

If it is $40,000, then where does the $10,000 elective deferrals to be claimed as it is definitely an expense of the S-Corp? Line 17 seems to be an option but that line is only for retirement contributions made by employer for employee, not for employee’s own elective deferrals.

$50k officer comp. the $10k “elective deferral” (401k?) is a reduction to box 1 W-2 wages, not S-Corp wages to owner.

However, an elective deferral would be unusual in my experience, usually a sole employee- owner business has employer contributions only (eg, SEP IRA), not elective deferrals.

Solo 401k...quite common.

How about it should match FICA wages in this case.

How about it should match FICA wages in this case.

Do you mean Form 1120-S Line 7 should match FICA wages on the W-2?

Could have paid $40,000 salary with a company p/s contribution of $10,000 and saved both shareholder and company FICA and medicare on $10,000, or total of $1,530.

Officer had $50,000 in FICA Wages $40,000 in wages subject to withholding based on your scenario.

As to the OP, $50,000 is the correct figure. As to the FICA wages statement, it's all wrong for 2% shareholders with SEHI. Also, §125 contributions not subject to FICA makes this statement wrong.

However, an elective deferral would be unusual in my experience, usually a sole employee- owner business has employer contributions only (eg, SEP IRA), not elective deferrals.

Three years ago I would agree. Today, let's say your client wants to contribute $20,000 to a retirement plan and your client is a shareholder in an S corp. To maximize the 199A deduction, you want to use the elective deferral. The profit sharing contribution reduces 199A income, whereas the elective deferral does not. My example gives you $4,000 less taxable income.