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Business tax · IRC §§ 1361–1379
An S corporation can reduce self-employment tax for profitable owners, but only when salary, distributions, basis and state taxes are handled correctly. We plan the election and run the strategy every year.
Serving United States, Virginia, Washington, DC, Maryland.
What we handle
Owners of an S corporation pay Social Security and Medicare tax only on wages, not on distributions. When profits are well above a reasonable salary for the owner's work, the savings can be significant. The election is made on Form 2553, and Revenue Procedure 2013-30 provides relief for late elections in many cases.
The structure has rules: salary must be reasonable, distributions must be in proportion to ownership, health insurance for more-than-2% owners runs through payroll, and losses are limited by basis. The QBI deduction under section 199A, made permanent by the 2025 tax law, and state pass-through entity taxes also change the math.
Speak with an advisorWhere we help
Distributions paid instead of salary to working owners are treated as wages.
Health insurance for more-than-2% shareholders is included in W-2 wages and deducted on the owner's return.
Losses are limited to the shareholder's stock and debt basis.
A deduction of up to 20% of qualified business income, subject to wage and service-business limits.
Our approach
A senior advisor reviews your facts and documents.
Scope, fees and timeline in an engagement letter.
Returns, elections and forms prepared and reviewed.
IRS contact and planning all year.
Questions
If your question isn't here, call (703) 880-8412 and you'll reach a person.
There is no single number. It usually starts to pay when profit comfortably exceeds a reasonable salary for your role, after adding payroll, filing and state costs.
Yes. An LLC can elect S corporation tax status without changing its legal form, by filing Form 2553 on time.
Yes, if you work in the business. A reasonable salary is required before taking distributions.
No. Nonresident aliens cannot be shareholders, so ownership changes need planning.
Latest updates
Authorized representatives can now make balance-due, amended return, extension, proposed assessment and federal tax deposit payments for business clients online. Appropriate authorization for the client and tax matter is required.
Source: IRS (IR-2026-134)
For 2027 the joint-return standard deduction rises to $33,200, the estate tax basic exclusion to $15,480,000, the annual gift exclusion to $20,000 and the Section 179 expensing limit to $2,640,000. Our advisors recommend revisiting year-end gifting and equipment purchase plans with these figures in mind.
Source: IRS (IR-2026-133)
All 6,576 nominated census tracts, including 2,594 rural tracts eligible for enhanced benefits, become Opportunity Zones on January 1, 2027 for ten years. Investors with capital gains should review the new map before committing funds.
Source: IRS (IR-2026-132)
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