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QUESTION DETAIL
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I own my own business which is an LLC taxed as a C-Corporation. I pay myself W-2 wages of $120K. I should have a net profit (after all wages and expenses) of about 50K. Is it better to pay the company taxes then distribute the 50K in dividends or take it as bonus?
ANSWER
Expert Linda Burroughs's Answer:
I recommend taking the $50k as a bonus. This will enable the corporaion to take an additional expense deduction and eliminate the double taxation. Dividends are not deductible by the corporation but wages are. You still have to pay tax on the dividends or bonus on your personal tax return.
