3 ms·

> Wages paid are deductible business expenses already. Up to how much? I can't imagine wages paid are 100% deductible. Otherwise nothing's stopping people from

• sokoloff 7y ago
  Up to any amount, provided they are: Ordinary and necessary, Reasonable in amount, Paid for services actually provided, Paid for or incurred in the tax year. And the "any amount" has a limit beyond which you are found to not be operating a profit-seeking business. (Those are the fairly standard tests for all business deductions, only the third is at all specific to wages.) There's no way to "make money" by incurring additional expenses and deducting them. If you have $100 in deductible business expenses and your marginal rate is 35%, you are paying $100 in expenses and getting back $35 on your taxes, so you're still out of pocket $65.
  • deleted 7y ago
    [deleted]
  • perl4ever 7y ago
    "There's [usually] no way"
• hizanberg 7y ago
  It’s 100% deductible just like most other businesses expenses given you only pay taxes on net profits, if it weren’t tax deductible you would end up with a higher tax burden than what your business makes and therefore can pay. Paying family/friends wages counts as a business expense to the company and taxable revenue to the employee. The business can also incur additional overheads for having employees like payroll taxes, super, etc.