# Is this understanding of S-corp taxes correct?

I am putting together a business plan for a s-corp and trying to figure out how the taxes will work.

Below is the scenario and my understanding:

1. S-corp shareholders: 2 partners (husband & wife)
2. Partners are also the employees
3. Company's earnings (a): 200,000
4. Partner 1 gets paid 50,000
5. Company deductions (milage, home office, etc.): 10,000
6. Company's 401(k) contributions: 17,500
7. Company's net profit: 122,500 (3-(4+5+6))
8. Dividend distributed between partners: 122,500/2 = 61250
9. Partner 1's gross income: 50,000 + 61250: 111,250
11. Partner 2's gross income: 84,000 + 61250: 145,250

Joint tax filling

Partner 1 & 2 will file taxes jointly.

1. Joint income: 256,500 ((9) + (11))
2. 401(k) for both: 50,000
3. Other deductions (mortgage, etc): 25,000

Is this understanding/math correct?

• The math doesn't add up. Where are the \$84K coming from? – littleadv Nov 14 '13 at 7:16
• Are you referring to 84K in point 10? Partner 2 has a full time day job as well and gets paid as W2 from his employer. This gig is completely independent of the s-corp. – josh Nov 14 '13 at 12:37
• So where's that partner's S-corp salary? You said he's an employee. – littleadv Nov 14 '13 at 19:38
• and the 17.5 for 401k in \$6 should be part of the 50K in #4, shouldn't it? Or are you referring to the match? If so - why the additional \$50K in number #2 in the next list? – littleadv Nov 14 '13 at 19:39