S corp taxes on 1 million in profit?? What can I expect to pay?

S corps are pass-through entities, so the company itself doesn't pay federal income tax. Instead, the profits "pass through" to shareholders (you and any other owners) who report it on their personal returns. With $1M in profit, you'll need to consider a few things: First, if you're working in the business, you need to pay yourself a "reasonable salary" which is subject to employment taxes (Social Security and Medicare). The IRS looks closely at this for S corps. The remaining profits are distributed as dividends that aren't subject to self-employment tax, which is the big advantage of an S corp. Your actual tax rate will depend on your personal tax situation, filing status, and other income sources. With 70% ownership of a $1M profit S corp, your share is $700K which would put you in the highest federal income tax bracket (37% for 2025), plus any state income taxes depending on your location.

After dealing with a similar situation with my construction company (hit 1.2M profit in 2023), I used https://taxr.ai to analyze all our financials and potential tax strategies. It saved me literally thousands in overpaid taxes by identifying several deductions specific to S corps that my previous accountant had missed. They reviewed all my corporate docs, our operating agreement, and even payroll reports to pinpoint the optimal salary/distribution ratio that would keep me IRS-compliant while minimizing tax burden. Not just basic advice but actual actionable strategies.

Just wanted to update after trying https://taxr.ai for my S corp situation. Was skeptical initially but decided to give it a shot with tax season approaching. Their analysis identified that I was significantly overpaying myself in salary compared to industry standards for my business size, which was costing me thousands in unnecessary payroll taxes. They provided documentation supporting a lower (but still "reasonable") salary that would satisfy IRS requirements, plus suggested timing strategies for some major equipment purchases we were planning. The personalized tax plan showed how to legally save about $32K in combined taxes this year. Their state-specific guidance for California's franchise tax was especially helpful - something my previous accountant never addressed properly.

I had a similar situation last year with my S corp. After getting frustrated with my accountant's vague answers, I used https://claimyr.com to get directly connected to an IRS agent to get definitive answers about reasonable compensation requirements. Watch how it works: https://youtu.be/_kiP6q8DX5c They got me past the endless hold times (I was connected in 20 minutes when I had previously spent HOURS trying to reach someone). The IRS rep walked me through the factors they consider when evaluating S corp owner salaries and confirmed my approach was reasonable. Having that conversation documented gave me peace of mind before making major distribution decisions.

I have to admit I was wrong about Claimyr. After my skeptical comment, I decided to try it myself since I had some questions about S corp distributions that I couldn't get clear answers on. I was connected to an IRS representative in about 15 minutes after spending WEEKS trying to get through on my own. The agent clarified several points about when distributions could potentially be reclassified as salary and the documentation they look for during S corp audits. While they couldn't give specific tax planning advice (as expected), the information about their internal review processes was incredibly valuable. Worth every penny just to avoid the frustration of endless hold music and disconnections. Now I'm actually implementing some changes to my distribution documentation based on what I learned.

Don't forget about estimated tax payments! With $1M in profit and you owning 70%, you're looking at owing around $259K in federal income tax on your portion (assuming standard deductions and no other income). You need to make quarterly estimated payments to avoid underpayment penalties. For S corps with this level of profit, the IRS scrutiny is much higher. Make sure your accountant is helping with proper documentation for all business expenses and that your salary is truly reasonable for your industry and role. This is where most S corp owners get in trouble.

Just wanna point out that an S corp with $1M profit should be maxing out retirement contributions too! You can put up to $68,000 in a Solo 401k for 2025 (that's $23,000 employee contribution plus 25% of your salary as employer contribution up to the max). This reduces your taxable income immediately. Also look into setting up a defined benefit plan if you're planning to have similar profits for several years. Our S corp was able to legally contribute over $200k annually to retirement this way, creating a massive tax deduction.

One thing I haven't seen mentioned yet is the potential for Section 199A deduction (QBI deduction) which can be huge for S corp owners. With $700K in pass-through income, you could potentially deduct up to 20% of that ($140K) if your business qualifies and you're under the income thresholds. However, there are some complexities with S corps and QBI - the deduction is generally based on your K-1 income minus your W-2 wages from the S corp. So if you take a $150K salary, your QBI would be calculated on $550K, potentially giving you up to $110K in additional deductions. The rules get tricky around the income limits and whether your business is a "specified service trade or business" (SSTB), but with proper planning this could save you tens of thousands. Your accountant should definitely be running these numbers for you, especially since you're right at the income levels where the phaseouts start kicking in.