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Submitted By: someone
Answered: January 20, 2020 9:28 pm
Answered: January 20, 2020 9:28 pm
I’m a sole proprietor. Can I pay W-2 wages to myself?
As a self-employed person, you cannot receive a salary. You can take a draw from your business bank account to cover your personal expenses, but this has no impact on your taxes. You are taxed on your revenue minus expenses; you cannot subtract the draw.
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Tax Glossary
Private letter ruling
A written determination issued to a taxpayer by the IRS that interprets and applies the tax laws to the taxpayer’s specific set of facts. A letter ruling advises the taxpayer regarding the tax treatment that can be expected from the IRS in the circumstances specified by the ruling. It may not be used or cited as precedent by another taxpayer.
