New Haven, CT: Understanding S-Corp Owner Compensation
By Eric L. Green, Your IRS Tax Litigator
(Tax Rep LLC)
Whether you are in New Haven, Connecticut or not, what is "Reasonable Compensation" is a critical issue for S Corporation owners. We have defended both taxpayers and tax preparers on this issue before the IRS. The answer to this question depends on a variety of factors and can be complicated. This blog post will explore the concept of reasonable compensation for an S-Corp owner and provide some basic guidelines to help you better understand how to support the wage number on that 1120-S Return.Tax ImplicationsThe Internal Revenue Service (IRS) requires that S-Corporations pay their owners “reasonable” compensation" in order to avoid tax penalties. Reasonable compensation is defined as any amount that is considered fair and consistent with the industry standard for similar services prov...
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