FICA Taxes
$12.2K
Distribution
$70.0K
With a $80,000 salary (53% of profit), you pay $12,240 in FICA taxes. The remaining $70,000 can be taken as a distribution, avoiding FICA.
As an S-Corp owner, you split your compensation between salary (W-2 wages) and distributions (profit sharing). You pay FICA taxes (15.3%) only on your salary—distributions avoid this payroll tax.
The IRS requires a "reasonable salary" based on your role, experience, and industry norms. Setting salary too low triggers audits. Most advisors recommend salary be 40-60% of total compensation.
FICA Taxes
$12.2K
Distribution
$70.0K
With a $80,000 salary (53% of profit), you pay $12,240 in FICA taxes. The remaining $70,000 can be taken as a distribution, avoiding FICA.
As an S-Corp owner, you split your compensation between salary (W-2 wages) and distributions (profit sharing). You pay FICA taxes (15.3%) only on your salary—distributions avoid this payroll tax.
The IRS requires a "reasonable salary" based on your role, experience, and industry norms. Setting salary too low triggers audits. Most advisors recommend salary be 40-60% of total compensation.
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