Edited: I realize now what you were saying after correcting my K1.
You're saying to not issue myself a W2 and to take 0 salary and make everything distributions/dividends correct?
Wouldn't that raise a red flag though. Because I'm suppose to pay myself a "reasonable salary." And it's typically suppose to be around 50-60% of the total net income of the S-Corp.
Then the IRS will reclassify part of my income as salary and I'll have to pay the extra taxes and interest anyways right? So what would be the benefit of not issuing a W2 if the IRS is going to reclassify it anyways?
Is it because they'll pick whatever rate they deem appropriated, which will probably come in slightly lower than the 60% I was planning? Or is it the possibility that I won't be levied penalties for not withholding the Social Security and Medicare taxes?
