Reasonable Salary
“I distribute cash from my S-Corp specifically to pay my personal income taxes, does the IRS consider those tax payments as W-2 wages?”
When an S-Corp distributes cash to cover an owner’s personal income taxes, the treatment often depends on how the payment is documented and whether it is tied to compensation, shareholder distributions, or a reimbursement arrangement. The IRS typically looks at the actual nature of the payment, the company’s payroll records, and whether the owner is also receiving reasonable W-2 wages for services performed. The bookkeeping entries, the timing of the payment, and the S-Corp’s overall compensation structure can all affect how the transaction is viewed. Going through your records with a CPA usually surfaces the answer in under an hour.
In your 60-minute session, the KGOB advisor handling it will:
- Read your exact situation and tell you, in plain English, what’s actually going on.
- Lay out your options and the trade-offs — no jargon, no judgment.
- Give you a clear next step you can act on, whether that’s with us or on your own.
This page is a prompt to start a conversation, not tax or legal advice, and states no tax-law specifics as fact. A consult session does not by itself create an ongoing engagement. We do not promise specific outcomes or savings. Kohari Gonzalez Oneyear & Brown PLLC — Charlotte, NC.
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