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Article Date:
April 2007


Word Count:
201

 

 

Avoiding Recapture of Social Security


Can an accountant operate as a C corporation and draw a small W-2 to avoid recapture of Social Security income? (D.M., Hickory, NC)

 

This would be a mistake. Your accountancy C corporation is taxed as a personal-service corporation, meaning that all income of this C corporation is taxed at the maximum corporate tax rate of 35%.1 This tax destroys the C corporation strategy of leaving money in the corporation to avoid Social Security recapture.

 

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