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Tax Law (Questions About Taxes)/S-Corp Officer Compensation when shareholder has no involvement


QUESTION: S-Corp Officer Compensation when husband is 100% shareholder and also and officer, and wife is an officer/employee/manager

So I am 100% shareholder of my S-Corp with little involvement as I have a full-time job in another entity but is listed as an officer of the company. My wife owns 0% shares but is the active manager, employee, and officer of the company. My wife receipt payroll and payroll taxes are deducted. We file a joint tax return.

1. Since my wife is already receiving compensation through payroll as an officer, do I still have to pay myself compensation through payroll as well? Especially when we file a joint tax return, so we are in a way paying payroll tax as a joint tax filer and officer of an S-Corp.

2. If the current structure doesn't work and could be of issue to the IRS, could I then just make her a 2% owner so that we can check the box on paying payroll tax to 2% shareholders/officers?  Currently that box of compensation to 2% shareholder is blank and I am a bit afraid of what the IRS will think, but the truth is I (100%) shareholder have no involvement and the 0% shareholder officer (my wife) runs the business full time.


Thanks for your question.

Since you are not an employee of the corporation you do not have to pay yourself a salary.  I don't think you have any concerns in this regard.

However, under the family attribution rules, your stock ownership is attributed to your wife, so you should check the 2% box.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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