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s-corp compensation for purposes of determining allowable SEP contribution

lyndaj0331
Level 3

Can you include draws as well as W-2 wages when computing the allowable SEP contribution limit?

Thank you.

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4 Replies 4
IRonMaN
Level 15

There are no such thing as "draws" in a sub S.  And if you have to ask about including "draws" it sounds like they are already in potential trouble for not paying a reasonable salary for the year.

ACME Taxes, Tatoos, Tires and Turtles (I've expanded my line of products to better serve you)
lyndaj0331
Level 3

I guess I should have said distribution.  It happens to be a real estate agent and last year was an exceptional year in this particular area.  It is not expected that she will have the same level of income in the future and certainly did not have it in prior years.

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IRonMaN
Level 15

Back to the original question - no you can't include distributions.

ACME Taxes, Tatoos, Tires and Turtles (I've expanded my line of products to better serve you)
Accountant-Man
Level 11

W2 wages for all qualified employees in the s corp.

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