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LAW FIRM - Salary or distribution?
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Date: July 7th, 2020 2:28 PM Author: Sapphire site headpube Last year, my CPA paid me 150k salary (W-2) from firm & no distributions.
This year, I'll probably make more than that. Should I ask him to pay me 150k salary (W-2) again and the balance as a distribution to save on taxes? |
Date: July 7th, 2020 2:30 PM Author: hateful thriller national security agency circlehead shouldn't you be bringing this humblebrag to your cpa (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562218) |
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Date: July 7th, 2020 2:30 PM Author: Sapphire site headpube honestly not a humblebrag. will likely not make more than 100k the following year =( (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562221) |
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Date: July 7th, 2020 2:31 PM Author: Insane lettuce rofl @ this POWERGOY cpa. is he on commission from FICA? (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562226) |
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Date: July 7th, 2020 2:33 PM Author: mind-boggling hall dragon Is there much of a difference between taking a distribution versus taking salary? Especially for a solo? I think the big thing is to just get the net profits out of your firm before the end of the year so as to avoid having to pay taxes on them twice. |
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Date: July 7th, 2020 2:33 PM Author: Insane lettuce the difference is FICA. distributions avoids FICA -- that's 15% (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562243) |
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Date: July 7th, 2020 2:34 PM Author: Sapphire site headpube should i stick to 150k this calendar year? or drop my salary to 100k and take the rest as distributions? (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562246) |
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Date: July 7th, 2020 2:38 PM Author: Insane lettuce goy tell? drop ur salary to 50k and take the rest as distros. (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562270) |
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Date: July 7th, 2020 2:37 PM Author: silver nursing home black woman Isn't FICA capped at below $150k though? (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562265) |
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Date: July 7th, 2020 2:37 PM Author: Insane lettuce something like that. so it'd be material to avoid FICA if the guy makes 150k total (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562266) |
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Date: July 7th, 2020 2:39 PM Author: Sapphire site headpube so he really fucked me then? (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562276) |
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Date: July 7th, 2020 2:41 PM Author: Alcoholic Crusty Bawdyhouse Associate employee side FICA is capped. employer is not.
If OP is a partner or business owner he has to pay both sides of FICA on salary, not on distributions.
making distributions more than 50% of your total comp is asking for it. |
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Date: July 7th, 2020 2:44 PM Author: mind-boggling hall dragon It is literally INSANE how much you rich people pay in taxes. They withhold like $25 from my paycheck for federal income taxes. I pay like maybe 3-4% per annum. Somewhere in that range. Obviously only pay the employee side of FICA. |
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Date: July 7th, 2020 2:44 PM Author: Sapphire site headpube So I should probably stick with the same salary as last year and just take the excess in distributions? What if its over 50%? (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562306) |
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Date: July 7th, 2020 2:46 PM Author: White alcoholic selfie hairy legs This is misleading. Social security is capped for both employer and employee. Medicare is not capped for either. (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562311) |
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Date: July 7th, 2020 3:02 PM Author: Alcoholic Crusty Bawdyhouse Associate this is so weird. For some reason I was sure SS was not capped on the employer side. Guess I was wrong. thanks. (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562411) |
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Date: July 7th, 2020 2:43 PM Author: silver nursing home black woman Yeah, agree. But it seems like at least originally he was set on taking at least 150k salary and the only question was MOAR salary or to take the rest as distribution. (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562298) |
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Date: July 7th, 2020 2:37 PM Author: mind-boggling hall dragon yeah, exactly (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562267) |
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Date: July 7th, 2020 2:39 PM Author: lascivious business firm jewess you should take 100% of your pay as a draw. Yeah, you're supposed to take a reasonable salary but trust me no one is ever going to check. You save 16% or so on payroll taxes at least in CA. (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562280) |
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Date: July 7th, 2020 2:40 PM Author: Sapphire site headpube Well i think i need to at least take 100k, since i got PPP funds (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562282) |
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Date: July 7th, 2020 2:42 PM Author: lascivious business firm jewess not sure how that works re PPP. you should pay yourself W-2 up to the PPP amount, sure. but after that, or next year, take everything as a draw. my CPA friend told me that in his decades of practice he's never seen anyone get got for failing to take a reasonable salary and that i should just do 100% draw. (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562290) |
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Date: July 7th, 2020 2:43 PM Author: Insane lettuce why is the reasonable salary for a solo shitlawyer not 60k? (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562296) |
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Date: July 7th, 2020 2:44 PM Author: lascivious business firm jewess i'm not sure what you're asking. i went solo recently. my reasonable salary is 0. (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562302) |
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Date: July 7th, 2020 2:47 PM Author: Insane lettuce 0's not a reasonable salary once u have revenues (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562317) |
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Date: July 7th, 2020 2:49 PM Author: lascivious business firm jewess 100% agree. and it was a long back and forth with my buddy. i took your position. said you know by law i have to take a reasonable salary, etc. but in the end he said who cares if it's not reasonable when no one ever checks (at least from the thousands of clients he's serviced over the decades). then i started to take all draw. (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562330) |
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Date: July 7th, 2020 2:53 PM Author: Insane lettuce audit risk is non-zero. would u rather be audited and have the IRS tell you that ur reasonable salary is too low and not reasonable and just make u pay more, or have them start imposing negligence penalties and shit bc they think ur a fraud for paying 0 as a reas salary? (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562356) |
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Date: July 7th, 2020 2:44 PM Author: Alcoholic Crusty Bawdyhouse Associate Do you have C corp or S corp PC? (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562305) |
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Date: July 7th, 2020 2:45 PM Author: Sapphire site headpube s corp PC (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562307) |
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Date: July 7th, 2020 2:55 PM Author: arousing goal in life 100k + rest as distributions. I will do 50k w2 and 500k+ in distributions this year. (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562364) |
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Date: July 7th, 2020 3:00 PM Author: Sapphire site headpube 100k just b/c i took PPP? or because i took 150k last year for salary? (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562390) |
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Date: July 7th, 2020 4:02 PM Author: arousing goal in life i did 100k for PPP but I could make an argument it is a reasonable amount. More than all my employees, up and down years, etc. (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562646) |
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Date: July 7th, 2020 3:01 PM Author: Sapphire site headpube is your cpa doing all this or are you using software like gusto? (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562399) |
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Date: July 7th, 2020 4:02 PM Author: arousing goal in life CPA. (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562648) |
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Date: July 7th, 2020 3:04 PM Author: Insane lettuce side Q: why does OP have a "CPA"? cant use turbotax? (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562419) |
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Date: July 7th, 2020 3:08 PM Author: turquoise aphrodisiac sanctuary Can you get the 199A deduction? (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40562442) |
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Date: July 7th, 2020 9:02 PM Author: Ivory massive house Fire your CPA (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40564411) |
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Date: July 7th, 2020 9:08 PM Author: Insane lettuce ... and hire a jewish one (http://www.autoadmit.com/thread.php?thread_id=4578527&forum_id=2#40564438) |