This post has been closed and is not open for comments or answers.

Undistributed Taxable Income Previously Taxed

I run an S-Corporation, and I am trying to do my business taxes myself for the first year. I have been in business for 23 years. According to my 2009 K-1, I made an income of $99,000. Since I was already taxed on this income, do I still have to pay taxes on money I distributed to myself in 2010?

I am getting puzzled because it is showing the $66,000 I distributed to myself on the K-1 in 2010 but it seems I am still getting taxed for these distributions. Why aren't the distributions being deducted from the income this year? Also where would I put these tax free distributions on my personal taxes?
    An S corporation is known as a pass-through entity.  This means the earnings are generally not taxed at the entity level (exceptions are beyond this response, but does not appear to apply to you).  The earnings pass-through to the shareholder(s) and are included in their 1040.  These amounts are reflected on each shareholder Schedule K-1.  You need to be maintaining a basis schedule in your S corporation investment.  You do not indicate how long you have been an S corporation (just that you have been in business for 23 years), but generally, as long as your distributions do not exceed your basis in the S corporation, the distributions will not be taxed again.  As long as the distributions do not exceed your basis, these do not need to be reflected on your 1040.  If you were ever a C corporation before electing S corporation status, then this does get a little more complex.  As a side note, you will need to make sure you are paying yourself and any other active shareholders a salary and not just taking out distributions.  This is a very hot area for the IRS and triggers many an audit.