After you take a salary from your S corporation you may have dividends left over. Which means you have to ask yourself two important questions:
Question #1: Are these dividends subject to federal income taxes?
Question #2: How do I get the cash?
You’ll get straight answers that can put money in your pocket when you read my new article titled Tax Tips: Cashing In on Your S Corporation’s Profits.
Three ways our fact-filled article can help you:
- We’ll explain what “dividends” really means. To put it simply, “dividends” is the wrong word. Since you’ve never operated your S corporation as a C corporation, the S corporation will never pay you so-called dividends. The technical term for the after-tax money you take from your S corporation is “distribution.” Does this really matter? It does as you’ll discover when you read the full article.
- We’ll show you how to get cash out of your S corporation. You’ll receive a K-1 from the S corporation that shows the net income of the corporation after your salary and other expenses. Then you pay personal income taxes on that net S corporation income. What’s the next step after that? You’ll find out when you read the full article.
- We’ll tell whether to take the money and run or leave it in your corporation. You’ll have a decision to make. And it’s an important one. We’ll help you figure things out when you read the full article.