vvx
Well-known member
- Joined
- Aug 1, 2007
- Messages
- 802
- Reaction score
- 249
- Gender
- Male
- Political Leaning
- Liberal
Correct. My company is an S corporation, and I am taxed directly, as personal income, on my half of the yearly profits. This is on top of the income tax on the salary that I pay myself.
It's not like the first tax is on top of the second tax for the same dollars though. The money received as salary is taxed as a salary and allowed as a deduction for the s-corporation. You only pay tax on your share of the remainder of the S corporation income after deducting the salaries. In fact, one of the reasons people form S-corps is to reduce their tax liability, because shifting income off the W-2 eliminates the social security/medicare taxes on that income.