Who Pays the Employment Taxes of an S Corporation?

Full Question:

ARE S CORP STOCK HOLDERS LIBIAL FOR S CORP 941 TAX IF SO TO WHAT EXTENT
06/21/2011   |   Category: Taxes   |   State: Alabama   |   #25071

Answer:

The S-Corporation will pay the employer's share of FICA taxes (7.65%), and the employee will pay the other share of FICA taxes (also 7.65%). Between the S-Corporation and the shareholder, wages are subject to a combined 15.3% payroll tax, plus the shareholder's income tax rate. Profit distributions, however, are not subject to FICA payroll taxes; they are subject only to the shareholder's income tax rate. Therefore, the shareholder-employee will have a strong preference to pay herself a minimal salary and thereby increase the profit distribution.

See also:

http://www.ehow.com/info_8014672_corp-vs-llc-selfemployment-taxes.html
http://www.irs.gov/pub/irs-pdf/i941.pdf
http://www.ehow.com/about_5367709_corp-vs-corp-taxes.html