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Debbie is the 100% owner of an S corporation. She is considering whether to pay herself...

Debbie is the 100% owner of an S corporation. She is considering whether to pay herself a salary of $200,000 or instead to pay a salary of $60,000 and take an additional $140,000 as a distribution. How much FICA tax could be saved by choosing the second option?

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Answer #1

For 2018FICA rate is 6.2% on the first 128400 as social security tax and 1.45% on first 200000as medicare tax

FICA paid Under first option :[128400*.062]+ [200000*.0145]

             = 7960.8+ 2900

            = 10860.8

FICA under second option : [60000*.062]+[60000*.0145]

          = 3720+ 870

          = 4590

FICA saved :10860.8 - 4590 = 6270.80

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