Submitted By: someone
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

Material participation tests

Rules for determining whether a person is active in a business activity for passive activity rule purposes. Unless the tests are met, passive loss limits apply.

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