Owner salary (S-corp)
Reasonable compensation
Can You Write Off Owner Salary?
Short answer: Yes: an S-corp deducts the reasonable salary it pays its owner-employee, plus the employer payroll taxes.
Distributions aren't deductible. Paying too little salary to dodge payroll tax is a top IRS audit issue.
Records to keep: Keep receipts or invoices, proof of payment, and a short note of the business purpose.
BW-B22-00657
low risk
Owner salary (S-corp)
Reasonable compensation
General Business
Payroll & Labor
Business Write-Off Questions
Yes: an S-corp deducts the reasonable salary it pays its owner-employee, plus the employer payroll taxes.
BizWriteOffs provides educational information only and is not tax, legal, or accounting advice. Deductibility depends on your specific facts and records. Consult a qualified tax professional.
Business justification
Yes: an S-corp deducts the reasonable salary it pays its owner-employee, plus the employer payroll taxes. Distributions aren't deductible. Paying too little salary to dodge payroll tax is a top IRS audit issue.
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