An S corporation shareholder who performs more than minor services for the corporation will be its employee for tax purposes, as well as a shareholder. In effect, an active shareholder in a S corporation wears at least two hats: as a shareholder (owner) of the corporation, and as an employee of that corporation.

Does owner of S Corp get W-2?

As the sole owner of a Sub-S corporation, any compensation that the corporation pays you (you have to think of the corporation as a separate entity) is to be reported as wages, on a W-2.

When are S corporation employees, shareholders and corporate officers?

When corporate officers perform a service for the corporation and receive or are entitled to payments, those payments are considered wages. S Corporation Employees, Shareholders and Corporate Officers | Internal Revenue Service Skip to main content An official website of the United States Government English Español 中文 (简体) 中文 (繁體) 한국어

Is the owner of a s Corporation a self employed person?

Owners of S corporations are not self-employed, because they don’t pay self-employment tax (Social Security and Medicare tax) on their distributions from the business.  

Can a spouse be an employee of a S corporation?

However, what can make sense is when you can offer a spouse other tax free fringe benefits by virtue of being an S corporation employee including things like college classes, business travel, and other stuff like that. (This works better because the fringe benefit amounts aren’t subject to payroll taxes.)

How are payments made to a S corporation?

Payments made by an S corporation to its president and sole shareholder were wages subject to employment taxes, not distributions or loan repayments. Prior transfers by the shareholder to the corporation were capital contributions and not loans.