As an S corporation owner, you can avoid the double taxation that plagues income earned by a regular C corporation. Instead of being taxed twice—once on the corporation level and once personally—income flows through to the S corporation shareholders. So, it's only taxed once at your personal level.
For that reason, it makes sense to keep your salary as low as possible to minimize
Strategy: Transfer shares of the S corporation stock to your children. By doing that, some income is taxed to your children in their low tax brackets instead of your higher bracket.
If you follow the tax-law guidelines, you won't owe any tax on the transfers.
Example: Share the wealth
Say you're an S corporation employee-shareholder. The only other shareholder is your spouse, who doesn't work for the company. Your two children are in their late teens.
This year, your S corporation expec...(register to read more)