Sorry. I meant LLC. To max a 401K, you pay salary of 17K and shelter 15K. The other 2K covers SS. Point is that these ARE NOT things you can do as an “employee”.

Agreed…didn’t mean to obscure the point…and that is it!

That is a great setup.  So what I am hearing is that the dividends are NOT taxed corporately OR through pass through in come at regular rate... but are taxable at the 15%capital gains rate? 

Can I pay my assistant this way as well? 

[quote=Ready2Jump]That is a great setup.  So what I am hearing is that the dividends are NOT taxed corporately OR through pass through in come at regular rate… but are taxable at the 15%capital gains rate? 

Can I pay my assistant this way as well?[/quote]

Yes, no, no and unless she has her own S-Corp, no.

S-Corp income is not taxed at the corp level, is not taxed at the cap gains rate, and is not subject to social security taxes.  It simply flows through to the owner as ordinary income.

OK, so dividends flow through as ordinary income, but avoid the self-employment tax… correct?  

You guys have been a welath of info at a critical time for me.

THANK YOU!!!