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Pamela Avraham's Blog – January 2014 Archive (1)

Avoid NJ DOL Audits- S-Corp Owners Should Take Reasonable Compensation

In an S-Corporation, a popular choice of tax entity among businesses, an owner who works for the company is required to take wages. How much of the company’s income is classified as wages versus S Corp. income (reported to the owner on Form K-1) is up to the owner. The net income will be taxed regardless of how it’s classified. The big difference lies in federal employment taxes, which are not paid on K-1 income. Another consideration is that K-1 income is exempt from the new 3.8%…

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Added by Pamela Avraham on January 8, 2014 at 3:35pm — No Comments