Full question:
ARE S CORP STOCK HOLDERS LIBIAL FOR S CORP 941 TAX IF SO TO WHAT EXTENT
- Category: Taxes
- Date:
- State: Alabama
Answer:
The S-Corporation will pay the employer's share of FICA taxes (7.65%), and the employee will pay the other share of FICA taxes (also 7.65%). Between the S-Corporation and the shareholder, wages are subject to a combined 15.3% payroll tax, plus the shareholder's income tax rate. Profit distributions, however, are not subject to FICA payroll taxes; they are subject only to the shareholder's income tax rate. Therefore, the shareholder-employee will have a strong preference to pay herself a minimal salary and thereby increase the profit distribution.
See also:
http://www.ehow.com/info_8014672_corp-vs-llc-selfemployment-taxes.html
http://www.irs.gov/pub/irs-pdf/i941.pdf
http://www.ehow.com/about_5367709_corp-vs-corp-taxes.html
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
