Tax Pro Plus
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- S Corporations Reasonable Compensation Requirement
- Unlike a C corporation, which itself pays the tax on its taxable income, an S corporation does not directly pay taxes on its income; instead, its income, losses, deductions, and credits flow through to its shareholders’ individual tax returns on a pro rata basis. These distributions are not subject to self-employment (Social Security and Medicare) taxes. As a result, many S corporations ignore the requirement that each shareholder-employee must take reasonable compensation in the form of W-2 wages in exchange for services performed for the corporation. These wages are subject to Social Security and Medicare taxes (which the corporation and the employee generally split equally); the corporation is also responsible for paying the Federal Unemployment Tax (as well as any state unemployment taxes).
- The Ever-Changing Role of Tax and Accounting Professionals in the Modern Era
- Accounting professionals were able to help many organizations avoid things like cash flow emergencies, burnout, and anxiousness. Learn more.
- Owe the IRS Money? How Long Do They Have to Collect?
- Have you ever wondered how long the IRS has to question and assess additional tax on your tax returns? For most taxpayers who reported all their income, the IRS has three years from the date of filing the returns to examine them. This period is termed the statute of limitations. But wait – as in all things taxes, it is not that clean cut. Here are some complications:
- Why Employee Classification is of Paramount Importance
- Ultimately, it all comes down to the difference between salary and hourly pay employees.
- Too Many Transactions in QuickBooks Online? Create Rules
- It’s important to categorize transactions, but it takes time. If every day brings several dozen into QuickBooks Online, you can automate this process.
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