S-Corp Payroll Tax Guide for Owner Salary

• Social Security tax — employer and employee shares, up to the annual wage base.
• Medicare tax — employer and employee shares, with no wage cap.
• Federal and state income tax withholding on wages.
• Federal unemployment (FUTA) and state unemployment (SUTA) where applicable.

The S-corp withholds the employee portion from your paycheck and pays the employer portion. Both are deposited to the IRS on a schedule, then reported on Form 941 (and Form 940 for FUTA). At year-end, you get a W-2 reflecting wages and withholding.

Because distributions don't carry FICA, there's a planning tension between paying enough W-2 salary to be reasonable and not over-paying. See salary vs. distribution and reasonable salary planning for the two sides.

If your reasonable salary is $70,000, the company and you together pay roughly 15.3% in combined FICA on that salary, ignoring the wage base nuance. Distributions taken in addition to that salary generally don't carry the same payroll-tax cost.

• Forgetting that the company also pays an employer share of FICA, not just the employee.
• Skipping payroll for months and trying to 'true up' at year-end inconsistently.
• Treating the personal income tax piece as the whole story.

The salary calculator models owner pay so you can see the rough payroll-tax impact alongside distributions and reserves before payroll runs.