Investing in Dividend Stock as an S corporation vs a an Individual

[moriej32]

Would there be any tax advantages if I bought stocks through an S corporation rather than as an individual? I want to purchase dividend stocks such as those from the Dividend Aristocrats, QYLD, ect… I initially will reinvest the stock dividends for a couple of years before starting to live off the dividends. At this time I don’t plan to sell the dividend stock, but would like to know if there are any tax saving advantages from living off the dividends and selling the stock as an S corporation rather than as an individual. Thanks in advance for any help you can give.

[tagteam · Accepted solution]

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@moriej32 wrote:

Would there be any tax advantages if I bought stocks through an S corporation rather than as an individual?

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There would be little to no advantage, in terms of income taxes, as the dividends would be pro rata share items and passed through to you (at 100% if you are the sole shareholder) on your K-1.

[Mike9241]

there actually can be a disadvantage depending on the state.  some impose an income tax on the S-Corp earnings.  in addition, that state income tax would likely need to be reported on schedule A of your 1040 rather than schedule E.

as others have said each year the S-Corp income would pass through to the shareholders and be taxed as if they earned the income directly.

they would face a problem of having to come up with $$$ to pay the income taxes on the S-Corp income