MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

The 1st Tax Day of Christmas: Adjust your S-Corp Payroll

19 Dec 2019 · 2 min

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This content was created by MARK KOHLER. This content was uploaded by MARK KOHLER. This is a YouTube video titled "The 1st Tax Day of Christmas: Adjust your S-Corp Payroll" (posted December 19, 2019) featuring MARK KOHLER giving a short tax-advice presentation for S‑Corporation owners. He outlines year-end payroll actions to take before December 31 to maximize tax benefits and avoid audits, listing four key considerations: consult your tax advisor; balance payroll vs. K‑1 to manage FICA and profit distribution; set payroll to optimize the 199A deduction while complying with IRS rules; adjust payroll to capture 401(k) company matches; and report health insurance premiums on the W‑2 to secure the deduction. He also references a linked article for more detail and advises consulting a tax advisor before year-end.

Chapters

On the first day of Christmas my true love gave to me the Tax Tip of an S Corporation. Now, there are some critical procedures that have to be completed by 1231 if you want the write off this year. Now for over 20 years I've been teaching that the S Corporation is the number one tax tip for entrepreneurs making more than 30 or $40,000 a year. And before year end, before 1231, you have to declare a payroll. And there's four things you want to consider in that payroll discussion. Your tax Advisor Number one, you don't want to take too much payroll because you have to pay FICA on that payroll. You want to push out the bottom as much possible profit as a K1. Number two, you want to take enough payroll to also maximize the 199A deduction. And you want to be in compliance with the IRS rules for this because taking a little bit more payroll actually gives you a better deduction on the 199A. Number three, you want to hit the sweet spot on how much you want to put in your 401k because the match that the company makes on your 401 contribution is a derivative of your total payroll. And then number four, you also have to declare the health insurance premiums you paid during the year on the W2 for your payroll report or you don't get the deduction. In summary, you can see that there's a lot of factors to consider, but you also want to nail this to save taxes and still be audit proofed. Now down below I've got a link to an article that talks about this in a more in depth manner. Make sure you get with your tax advisor and talk about this before December 31st.