The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: S corp income? Date:  3/9/2005  7:45 PM
Author:  vrb747 Number:  77535 of 130422

Basically, if you dont pay yourself a salary, you cannot fund an IRA or 401K. I may be incorrect about this, so definitely consult a tax attorney.

If you do pay yourself a salary, you have to pay social security taxes (15.3%) by the end of the year.

A better way next time might be a SIMPLE IRA. You can contribute everything you pay yourself as a salary towards a SIMPLE IRA. Of course you will pay social security tax but the entire amount u contribute to the IRA will be tax deductible, so u will probably break even (assuming 15% tax bracket). For 2005 u can contribute 10,000, more if you are above 50. Plus the employer (in this case your s-corp) can tack on another 3%.

Copyright 1996-2020 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us