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Suppose I have an LLC and for simplicity's sake I'm the only member and I choose to be taxed as an S Corp. I fill out a W2, becoming an employee-owner of the LLC and I pay myself 50% of the LLC's earnings.
From what I can gather, I must pay Social Security and Medicare tax on my salary but the LLC's retained profits are not subject to these taxes.
If the LLC is a "pass-through entity" (please correct my terminology if wrong), meaning all of its profits/losses personally belong to its members, then won't the profit not paid as salary become my income and be subject to Medicare/Social Security tax? Or is it only subject to income tax?