Sorry if this seems like a dumb question, but I'm a very confused on the taxes being taken out by gusto on payroll as an owner only s-corp. business for the year will gross about $145k and my reasonable salary comes to about $85k. I filed a form 2553 and have been treated as an s corp starting in may of this year and am running one big payroll for this year.
based on the may start, gusto has the payroll to be about $54k. this is the part where it is confusing me. it is taking out about $12.5k in employee taxes and $4.6k in employer taxes. now, i've already been paying taxes quarterly throughout the year from the business. when adding up between the personal salary payroll taxes and amount that is paid in general from the business, it seems like a lot. more than what i paid in taxes filing as a schedule c the past 2 years.
maybe i'm not understanding something correctly? maybe some of this is a write off? i've searched the internet for answers, but am not finding anything to help me understand it easily so sorry if this seems dumb. ive emailed my cpa about a week ago with questions but i think with the holiday week they may not be checking. i've attached a photo with exact preview numbers. thanks for any help to help me understand this in advance.
https://i.redd.it/gzimes6eem9g1.png
Posted by Cautious-Oil-7041
3 Comments
The S corp pays you a salary. The S corp also pays a portion of employment taxes (which it deducts along with your salary to get to taxable income of the S corp) and withholds a portion of employment taxes on your behalf. It may or may not withhold income taxes on your salary as well
The net taxable income goes to you, the owner. You have been paying estimated taxes based on this net amount (or accidentally paying more it sounds like). Your estimated taxes and withholding from the S corp (if any) are the amounts you’ve paid in
Your salary and net income from the s corp are your taxable income. If you ended up withholding and estimating a lot more this year, you’ll probably get a larger refund
It could be possible that the cost is greater than the benefits. Did you run an analysis of cost vs benefits of being an S–Corp?
Is that 145k gross the amount of net business income you would have if not a S corp?
Roughly, the federal income taxes on 145k as a single self employed person would be 36,000
As a S corp with 85k salary, it would be more like 32,500, so not a huge difference.
For this year, you probably over estimated your estimated tax payments, and will get a refund from that. How much federal estimated tax payments did you make?