Okay, so I do consulting on the side (my employer knows) and have an s-corp for that. For simplicity let's say:
I have 50,000 in net income. I distributed 40,000 of that to myself. However, it seems like I am supposed to pay some of that as "salary".
a) If I pay SE Tax on the 40,000 do I need to declare it as salary?
b) On my 1120-s if I say 20,000 of it was salary... what number do I put in the distributions. Should it be 20k or 40k?
I am very confused on this.
