Arch
05-15-2012, 10:37 AM
In the process of incorporating an S-corp and had a question about taxes. I have a CPA but I was browsing through the forums on this site and found quite a few good posts/discussions so thought I will post here.
Assume my S-corp makes $100K a year and I pay myself a salary of $60K. That leaves $40k that I can use for everything else, including paying for the corporation expenses distributions and if I am not mistaken, paying the employer contributions for the employee FICA taxes.
The employee pay will be subject to all the taxes: Federal, State, City, FICA ($3,390 @ 5.65%).
I understand that as an s-corp/employer I am supposed to pay the employer contributions for the FICA. ($4,590 @ 7.65%)
My lack of knowledge concentrates around the $40K. How does that get taxed?
So out of the $40K, I pay the employer FICA, pay for any s-corp expenses (lets assume about $10K a year) : $40,000 - $14,590 = $25,410
I take the $25,410 as distributions and those get taxed Federal, State, City, FUTA?
OR do I pay taxes on the full $40K?
- Thanks
Assume my S-corp makes $100K a year and I pay myself a salary of $60K. That leaves $40k that I can use for everything else, including paying for the corporation expenses distributions and if I am not mistaken, paying the employer contributions for the employee FICA taxes.
The employee pay will be subject to all the taxes: Federal, State, City, FICA ($3,390 @ 5.65%).
I understand that as an s-corp/employer I am supposed to pay the employer contributions for the FICA. ($4,590 @ 7.65%)
My lack of knowledge concentrates around the $40K. How does that get taxed?
So out of the $40K, I pay the employer FICA, pay for any s-corp expenses (lets assume about $10K a year) : $40,000 - $14,590 = $25,410
I take the $25,410 as distributions and those get taxed Federal, State, City, FUTA?
OR do I pay taxes on the full $40K?
- Thanks