<h1>Understanding S-Corp Tax Strategies: Legal Ways to Minimize Your Tax Burden</h1>
Hey, Dad, could you tell me something that seems illegal but isn't?
Absolutely! I don't pay self-employment tax on 50% of my income.
But aren't you self-employed?
Yep. Uh, I think that is illegal.
Look, son, here's what the rich do. I run my LLC as an S-corp and can therefore divide my profits between a W-2 salary, taxed, and a reasonable distribution, less taxed.
How much less tax?
Well, I made $200,000 last year as a business. Deduct $50,000 of expenses, $150,000 net, and distribute 50% of that to myself. So I saved $11,475.
So why don't you just claim it all as a distribution?
Whoa, you said seems illegal, not is illegal. The IRS loves watching S-corps. You have to make the division between salary and distribution reasonable.
So what is reasonable?
Could you pass the salt?

Explore the fascinating world of S-Corporations and learn how businesses can legally reduce their tax liabilities through strategic salary and distribution divisions.