A draw or dividend from an S corporation is not normally taxable income. When you report your corporate income, you pay tax on it on your personal tax return from the entry on your schedule K-1. If you take a draw, you are simply taking that profit out that you already paid tax on, so it is not taxed again.
The only time it would be taxed is if you withdrew more than your investment (basis) in the corporation, in which case you would report an investment sale to reflect capital gain income.
If your corporation was a normal (C) corporation, the dividend would be taxable, since a C corporation pays tax on it's own income. So, a distribution would be taxed to the shareholder as a dividend. That may be what is confusing you!
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