Underreporting S Corporation Officers’ Compensation?

A report from the Treasury Inspector General for Tax Administration found that single-shareholder owners in the 266,095 corporations looked at had profits of $108 billion and took $69 billion in the form of a distribution, without reporting they received officer’s compensation for which they would have to pay Social Security and Medicare tax (FICA). The report is a heads up to the IRS to step up its examinations of S corporations and specifically check to see that officers (typically owners) are receiving reasonable compensation for services performed and not ducking FICA taxes. #IdeaoftheDay

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