For those who want a quick rule of thumb, many CPAs suggest salary should be at least 1/3 of S Corp distributions for service-based businesses. So if you want to take $90k in distributions, your salary should be at least $30k. This isn't foolproof but supposedly comes from patterns in what triggers IRS scrutiny. Just passing along what my CPA told me!

The confusion around S Corp profit distribution formulas is totally understandable - there really isn't one "correct" equation because the IRS deliberately keeps "reasonable compensation" somewhat subjective. What I've found helpful is thinking of it in terms of what you'd pay to replace yourself. If your S Corp couldn't function without you, then most of the profit should probably be salary. But if you've built systems, have employees, or significant capital investments generating revenue, you can justify a higher distribution percentage. A practical approach: Start with market salary data for your role/industry (sites like PayScale, Glassdoor, or BLS.gov), then adjust based on your actual hours worked and responsibilities. Document your reasoning - if the IRS ever questions it, you want to show you made a good faith effort to be reasonable. One thing that's helped me is tracking what percentage of revenue comes directly from my personal work versus other factors (equipment, employees, systems, etc.). The higher your personal contribution, the higher your salary should be relative to distributions.

One thing nobody mentioned yet - some states have minimum taxes for businesses even if you don't have enough income to owe regular income tax. For example, I'm in California and have an LLC for my freelance work, and I have to pay the $800 minimum franchise tax even if I don't make enough to owe income tax. Double check if your state has something similar!

don't forget about quarterly estimated taxes for both federal AND state if your self employed!! i totally messed this up my first year and got hit with underpayment penalties from both. even if you end up owing $0 to your state at the end of the year, you might still need to make estimated payments throughout the year based on what you EXPECT to owe.

Just to make sure we're all on the same page here - are we talking about claiming her as a qualifying relative dependent, not a qualifying child dependent? Because the rules are different for each, right? For a qualifying relative, her gross income must be less than $4,700 (for 2023), but Social Security benefits generally don't count toward this amount unless she has significant other income. Did I understand your situation correctly?

You're absolutely correct - you do NOT report her SSDI on your tax return. Her disability income remains her income, not yours. The fact that you're claiming her as a dependent doesn't change whose income it is. As long as she meets the qualifying relative tests (gross income under $4,700 excluding SSDI, and you provide more than half her support), you're compliant. Keep good records of your support expenses - housing, food, medical costs, utilities, etc. - in case you need to prove the support test later. The IRS is pretty clear on this in Publication 501, but I understand why it can be confusing at first!

Watch out for state tax implications too! I set up a crypto trading LLC but didn't realize my state (CA) treats LLCs differently than the feds. Ended up with an $800 minimum annual tax plus an LLC fee based on gross receipts that cost me thousands. Consider a tax-friendly state like Wyoming, Nevada, or Texas if you're serious about this. And remember that moving crypto between personal and business wallets creates taxable events!

Great thread with lots of valuable insights! I wanted to add a few points from my experience helping clients with similar crypto business structures: **Entity Formation Timing**: Form your LLC BEFORE you start staking/trading if possible. Having rewards flow directly to the business entity from day one simplifies your tax situation significantly and avoids the personal-to-business transfer issues mentioned above. **Quarterly Estimated Taxes**: With the profit levels you're describing, you'll definitely need to make quarterly estimated tax payments. The IRS expects payment as you earn, not just at year-end. This is especially important for crypto gains since there's no withholding. **Audit Documentation**: Keep detailed records beyond just transaction logs. Document your trading strategy, time spent, market research, and decision-making process. If you qualify for trader tax status, the IRS will want to see evidence of your systematic approach. **Professional Fees**: Budget for proper tax prep - expect to pay $3-5k annually for competent crypto tax preparation with business entities. It's worth it to avoid costly mistakes. One last thing: consider setting aside 30-40% of profits for taxes immediately. Crypto gains can create surprise tax bills that catch people off guard!

Has your mom considered doing some part-time work to earn those quarters? Might be simpler than the property management route. Even working part-time at minimum wage for a year would get her the 4 quarters she needs.

Another option to consider is volunteer work that pays a small stipend. Some organizations like AARP Tax-Aide, AmeriCorps Seniors, or local nonprofits offer volunteer positions with modest compensation that could count toward Social Security credits. My neighbor earned her final quarters through a part-time position with her county's senior services program - she helped other seniors navigate government benefits and earned just enough to qualify for her remaining credits. The work was meaningful and the hours were flexible, which might appeal to your mom more than traditional part-time employment. You might also want to double-check her existing earnings record with SSA to make sure all 36 quarters are properly credited. Sometimes there are errors or missing quarters from years past that could reduce the number she actually needs to earn.