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Hi, my name is Mark. I will be happy to help you with your questions. If you do incorporate you would be creating a separate entity. This entity would be separate from you. You would need to form a C-Corporation. With a C-Corporation you would need to pay yourself a reasonable salary. So you would also have payroll reports to file. Any taxable income generated by the C-Corporation would be subject to tax. The income would be taxed a second time when you take it out as dividends. So with a C-Corporation one of the drawbacks is that there are two levels of taxation (one at the corporate level and one at the individual level when dividends are paid).
Let's assume that the corporation generated a profit of $40,000. You could pay yourself a salary of $18,000 and you would not go above the amount for SS benefits. The remaining $22,000 would be taxed in the corporation. Once you take out the difference ($22,000 of net income less taxes paid) you would pay taxes as dividends.
I am showing that the limit is $15,720.
For income before your benefits are impacted.
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With a C-Corporation the concern is that the salary would be too high. By having a salary that is too high you would be avoiding the corporate tax and only paying taxes at the individual level. There is no percentage.
I did not want to tell you to take $18,000 and have you be penalized. That was the reason that I double checked the amount.