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03 - Accounting & Taxes Accounting Help & Tax Strategies

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  #1  
Old 11-15-2007, 11:08 AM
mpbeaver mpbeaver is offline
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Default S-Corp Owners

Does an S-Corp have to pay SUTA & FUTA on the owner's salaries. It's not like the Corporation is going to fire their owners.

Don't know if I have to pay this tax.
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Old 11-15-2007, 11:28 AM
David Staub David Staub is offline
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An employee is an employee. A shareholder who is an employee is subject to the tax.

By the way, I have seen S corp shareholders fired by the corporation (obviously not when there is only one shareholder). Not every "owner" has the control to prevent his or her termination. It would be unreasonable to expect a special rule that applied to all "owners" of the business.
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Old 11-15-2007, 11:38 AM
mpbeaver mpbeaver is offline
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Figured that and everything I knew said no, but I was hoping.


But Thanks
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  #4  
Old 11-15-2007, 03:29 PM
BillR BillR is offline
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There is no legal relationship between an employee of an S-Corp and an owner. They may be the same person but they are distinct for tax purposes as mentioned before.

Employees pay all normal taxes. Employers pay all normal employer-related employee taxes.

Also, it is rather normal for S-Corps to fire employees who are also shareholders. Usually there is a buy-sell agreement to cover this sort of thing.
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  #5  
Old 11-15-2007, 03:50 PM
SeattleCPA SeattleCPA is offline
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S corp shareholder employees do pay FUTA. It's 6.2% of the first $7,000 of wages... less any amounts you pay in SUTA.

Some states don't have SUTA apply to shareholder-employees (like Washington state). And in many states, SUTA is very modest... Like in Arizona, SUTA is often $147 a year...
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