What constitutes a 'Reasonable Salary' under IRS guidelines?

The IRS requires S-Corp owners providing services to pay themselves a fair market salary comparable to what an independent company would pay for similar duties.

What happens if an S-Corp pays $0 in salary and takes all profit as distributions?

The IRS can reclassify 100% of owner distributions as W-2 wages, assessing back payroll taxes, substantial penalties, and interest.

USAS-Corp Reasonable Salary & FICA Tax SavingsBusiness

US S-Corp Reasonable Salary & Payroll Tax Savings Calculator

Calculate your annual self-employment / FICA payroll tax savings by electing S-Corporation tax status, paying yourself an IRS-defensible reasonable W-2 salary, and taking the rest as tax-free distributions from payroll tax.

Unternehmen & Gewerbe Steuern & Abgaben Lohnabrechnung

Eingabedaten

Echtzeit-Berechnung

Total Annual Business Net Profit ($)

Schnellauswahl:

IRS Reasonable W-2 Salary Paid to Owner ($)

Schnellauswahl:

Berechnetes ErgebnisS-Corp Reasonable Salary & FICA Tax Savings

Gross Annual FICA / Self-Employment Tax Saved with S-Corp

$9,071.37

Net Annual Savings (After Estimated $1,500 Payroll/CPA Fees)

$7,571.37

FICA-Free Shareholder Profit Distribution

$70,000

Detaillierte Berechnungsübersicht

W-2 Owner Salary

$70,000

S-Corp Distribution

$70,000

S-Corp FICA Tax

$10,710

Gross Tax Savings

$9,071.37

Berechnungsmethodik

FICA Tax Savings = Distribution Amount (Net Profit - W-2 Salary) * 15.3% Self-Employment Tax Rate (subject to SS wage cap).

Wichtiger rechtlicher Hinweis

The IRS requires S-Corp shareholder-employees to pay themselves a 'reasonable compensation' salary before taking distributions. Underpaying salary triggers IRS audits.

Dieser Rechner dient ausschließlich Informations- und Bildungszwecken. Die Ergebnisse stellen keine verbindliche Finanz-, Steuer- oder Rechtsberatung dar.

Häufig gestellte Fragen

S-Corp owners pay 15.3% FICA taxes only on their designated W-2 salary. Remaining net profits taken as distributions are exempt from FICA taxes.

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Eingabedaten

Detaillierte Berechnungsübersicht

Berechnungsmethodik

Wichtiger rechtlicher Hinweis

Häufig gestellte Fragen

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