Who gets to decide which employer is the 'primary' one, why should the sequencing of payments be determinant...avalpert1,That is incorrect. Both employers must pay even if the employee hits the cap (for a variety of reasons not the least of which being how would you choose which employer doesn't have to).Hello avalpert1,
When the owner/employee also has a separate fulltime W2 job through which they hit the social security tax cap (like with the OP). In that case, with an S-Corp, the business will still pay the employer side of social security taxes in addition to both sides of the medicare tax.
If OP hits the S.E.T. cap at the full time job the S-Corp would not be liable for any SS tax AFAIK.An S-Corp owner must pay themselves a reasonable salary, they cannot take all income as a distribution instead.In addition to this if OP did have any S-Corp SS liability one way or the other, OP could eliminate his payroll taxes by taking distributions (instead of income) if he has any retained earnings.Presumably his primary employer would pay it. OP can wait and pay himself at the end of the year if he wants. By then his employer would have submitted the payroll taxes.That is incorrect. Both employers must pay even if the employee hits the cap (for a variety of reasons not the least of which being how would you choose which employer doesn't have to).
In any case, the questions are moot since the law requires both employers to withhold social security taxes up to the point where they have paid the employee the amount of the social security cap. There is a provision that allows the employee to claim a refund of any excess amount above their own cap (26 USC 6413(c)(1) if you are interested) but no such provisions exists for employers.
You lack familiarity the relevant laws, I'd suggest you not offer advice in this area as I'm sure you wouldn't want to mislead people.
Sure, but not without boundaries - and 0% is clearly on the other side of the boundary (that is quite clear from court precedents)."Reasonable" is a gray area.An S-Corp owner must pay themselves a reasonable salary, they cannot take all income as a distribution instead.
Statistics: Posted by avalpert1 — Mon Aug 19, 2024 5:33 pm — Replies 56 — Views 2590