What is "Reasonable Compensation"?

Reasonable Compensation is a current high priority issue for the IRS concerning all corporations, especially S corporations

Wage Compensation for Corporation Officers

Corporate officers are specifically included within the definition of employee for FICA (Federal Insurance Contribution Tax Act), FUTA (Federal Unemployment Tax Act), and federal income tax withholding under the Internal Revenue Code. When corporate officers perform services for the corporation, and receive or are entitled to receive payments, their compensation is generally considered wages. Sub-chapter S corporations should treat payments for services to officers as wages, and not as distributions of cash and property or loans to shareholder or limited liability company members.

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Choosing A Preparer For Your Tax Situation

The choice of a tax preparer is not easy. All preparers are not capable of handling all tax situations. The choice of a qualified tax preparer is very dependent on your financial activities and types of income.

See how to match the preparer with the situation.

If your incomes are Level 1. 

Basic tax situation, incomes from employment (W-2’s not 1099-Misc), interest and/or dividends (under $400), unemployment, and taxable pension payments. You could have simple itemized deductions

Your Tax Preparer Options ...

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Can You Use Independent Contractors?

The following is the story of how one person came to an understanding of what an “Independent Contractor” is.

The morning sun was just warming the tops of the hills surrounding the lake as Ed dropped his line in the water and made himself comfortable in the deck chair. The light breeze was just enough to cause small waves to lap against the pontoons of the houseboat and give a rocking motion to the craft. Ed knew none of the others would be getting up any time soon.

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