I am a solo doctor in California with 5 employees. I earned about $500k/year. I was told before that If I set my s2 salary around social security wage base, they wouldn't bother to audit me. However, I heard of friends who set a really low salary such as $80k/year to minimize payroll taxes. I also have friends who set their salary at $240k/year and take the rest as distributions.
"The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total"
For 2016, social security wage base was $118,500 so I set my W2 income as $120,000. I deduct $18k for 401k. I also deduct about $4000 for health insurance.
For 2017, social security wage base was $127,200, so I set my W2 income as $128,500. I deduct $18k for 401k. I also deduct about $4000 for health insurance.
Trying to figure out what salary to set for 2018. Planning to set about $150k/year salary and the rest distributions of $350k.
My company does 401k match of 4%.
Don't know if I should set the 401k salary to get a greater match. If I increase my salary from $128,500 a year to $185,000 to 2018, I would pay $56,600 more in W2. From the $56,600, my company would match 4% of that or $2260. I would have to pay 1.45% of $56,600 or $820.70 and my company pays $820.70 for a total of $1641.40 in taxes for the additional $2260 in my 401k.
Just wanted to get your thoughts. It doesn't make sense to me to set a higher w2 income.
"The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total"
For 2016, social security wage base was $118,500 so I set my W2 income as $120,000. I deduct $18k for 401k. I also deduct about $4000 for health insurance.
For 2017, social security wage base was $127,200, so I set my W2 income as $128,500. I deduct $18k for 401k. I also deduct about $4000 for health insurance.
Trying to figure out what salary to set for 2018. Planning to set about $150k/year salary and the rest distributions of $350k.
My company does 401k match of 4%.
Don't know if I should set the 401k salary to get a greater match. If I increase my salary from $128,500 a year to $185,000 to 2018, I would pay $56,600 more in W2. From the $56,600, my company would match 4% of that or $2260. I would have to pay 1.45% of $56,600 or $820.70 and my company pays $820.70 for a total of $1641.40 in taxes for the additional $2260 in my 401k.
Just wanted to get your thoughts. It doesn't make sense to me to set a higher w2 income.
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