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I think this is incorrect in two ways - you do still have to pay yourself salary, and dividends are taxed at normal income rates (due to pass-through) rather th
by tunesmith 13y ago
I think this is incorrect in two ways - you do still have to pay yourself salary, and dividends are taxed at normal income rates (due to pass-through) rather than capital gains rates. It's unfortunate that they are called dividends, because stock dividends are taxed at capital gains rates.
- vonmoltke 13y agoQualified stock dividends are taxed at a special capital gains rate. Unqualified dividends are taxed at the recipient's regular rate. See http://www.dividend.com/dividend-education/qualified-vs-unqualified-dividends/ http://www.dividend.com/dividend-education/qualified-vs-unqu....
- poulsbohemian 13y agoCurt - perhaps I could have written out explicitly "you still have to pay yourself a salary" but that was what I was trying to infer with my comment of "...because you are now an employee of the S corp..." I see you are also in Oregon, you might have better local advice for the parent poster. At a minimum, since you are both local to Portland you should meet up for a beer. ;-)
- stevenwei 13y agoThey are technically called distributions, not dividends, for the reasons you mentioned.