2 ms·
That's why you pay yourself a small, but not alarmingly small, salary W2 and take the rest on your K1 or such.
by ryanmarsh 9y ago
That's why you pay yourself a small, but not alarmingly small, salary W2 and take the rest on your K1 or such.
- gnicholas 9y agoThe IRS routinely audits people for not paying themselves a market salary in order to shift income to another category. So in playing this game, you have to factor in the likelihood of audit, cost of defense, and cost of penalties and interest that could be assessed.
- jjeaff 9y agoIn the hypothetical scenario of the op, he has 100k as a salary. Which the IRS would not ever likely contest. Since it gets you close to paying out your full ss tax anyway. (since ss tax cuts out somewhere around 115k or so). And it is also enough for almost any profession. Even CEOs of small companies earn in that range.
- ryanmarsh 9y agoIf there are job listings in your area for that salary it's market. I pay myself $80k. When I get audited it won't be for that.