How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Taxtom Your Own Question
Taxtom, Accountant
Category: Finance
Satisfied Customers: 2364
Experience:  25 Years in preparing Personal and Business Tax Retuns
Type Your Finance Question Here...
Taxtom is online now
A new question is answered every 9 seconds

If my S-corporation earns a profit, but I choose to leave the

This answer was rated:

If my S-corporation earns a profit, but I choose to leave the money in the business and not take a dividend, how is that money taxed at the end of the year? Do I need to pay employment taxes on the money?

Taxtom :

Hello, The money is taxes as if you received the a distribution. There are no emplyment taxes on the distrubution only on the wages you receive as an employee of the corporation. Once caution, if an owner of s-corporation does not take a resonable salary and takes distributions instead the IRS can recatagorize the distribution as wages and charge the employment taxes. Thank You Tom

Taxtom and 2 other Finance Specialists are ready to help you