Paying service fees to my S Corp?

[separate899]

• I would like to save on self-employment taxes.

I am a board advisor and receive direct payments in my name. I file as a sole proprietor because the companies I work with are not willing to pay an S or C corp directly. Can I create an S corp that I pay a service fee to, and that S corp pays me reasonable compensation as a w2 employee?  For the tax professionals, have you seen this legitimately done without violating any irs laws?

Here is an example:

- I get paid $300K per year as a 1099 NEC

- I pay an S Corp $75K in service fees

- The S Corp pays me $30K salary through a W2.

- I receive $45K in dividends from the S Corp 

[ThomasM125]

If the only reason you are setting up the S corporation is to shelter tax dollars, then the IRS will likely not allow it. You would need a legitimate business purpose for the corporation.