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posted Feb 21, 2025 8:16:51 AM

S-Corp, Salaried and partial owner

Hi there,

My scenario is that I am paid a salary as an S-Corp owner with a 49% share. The other partner covers the business tax side of things for the company, and we have not paid any distributions this year. For my personal taxes/self-employed taxes, do I claim 49% of the expenses minus my salary? 

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Expert Alumni
Feb 21, 2025 8:33:34 AM

You will enter your share of the S Corporation net income or loss as reported on the K-1 schedule that the corporation will issue to you. The profits will be divided based on the agreement between the shareholders as is typically stated in the corporate by-laws. So, your percentage will be based on the corporate by-laws that may differ from what distributions you received. It can be any percentage agreed upon by the shareholders.

 

You do not pay self-employment tax on S corporation earnings. You just pay social security/Medicare tax as listed on your W-2 form. You are required to pay a reasonable salary however to insure that you pay in your share of employment taxes.

 

So, prepare an S corporation return for the company, you can use TurboTax Business product to do that. When you are done you will have a schedule K-1 you can input into TurboTax. It goes in the Wages and Income area, then Business Items, then Schedules K-1, Q.