Blue is the owner of all of the shares of an S corporation, and Blue is considering receiving a salary of $110,000 from the business. She will pay the 7.65% FICA taxes on the salary, and the S corporation will pay the same amount of FICA tax. Blue reduces her salary to $50,000 and takes an additional $60,000 as a cash distribution. How would her Federal income tax liabilities change

Solution and Explanation:

The calculation of tax saving is shown below:

if B is getting the whole amount of salary the combined FICA tax liability of B and S Corp will be:

= $110000 multiply with 15.3 divide by 100

= $16830

If B is getting $50000 as salary the combined FICA tax liability of B and S corp will be

= $50000 multiply with 15.3 divide by 100

= $7650

thus the tax saving will be :

$16830 minus $7650

= $9180

The IRS can deem this arrangement unfit as make it mandatory for B to get the whole amount as salary. In that case, no change will take place in the tax liability.

one of the disadvantages of getting a government sponsored mortgage is they put a limit on the purchase price of the house. because the government is in charge of the mortage loan and terms, they are able to control how much money they are allowing someone to take out for the loan. not only are they incontrol, it's a lengthy process for a government sponsored mortgage.

answer; complain or request hazard correction from your employer;