- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Get your taxes done using TurboTax
An S-Corp doesn't pay dividends ... the shareholders have draws. On the K-1 the profits are passed thru to the sharesholders to be taxed on the personal return even if the profits are not distributed.
Only a C-Corp pays the stock holders dividends reported on a 1099-div.
Now as to the salary % ... if you have 10 employees it is possible that the business made quite alot on their labors and that can be passed thru to the shareholder and a $45K salary may be reasonable for the job you actually do for the company. However, if you are the only employee (W-2 issued) and you only took $45K when the business profited 100K it may look off if you are audited. What you should do is issue yourself a nice year end bonus on your paycheck and report it on the W-2.