How an S Corporation Election Reduces Your Self-Employment Tax

Lucas and Luna break down the S corporation election strategy for self-employed professionals. Using the example of a freelance software developer earning $180,000 in 2026, they show how electing S corp status can save over $8,500 per year in self-employment taxes. They walk through the mechanics of paying yourself a reasonable salary versus distributions, the IRS thresholds for eligibility, and the paperwork costs involved. They also discuss a real 2025 Tax Court case where the IRS challenged a taxpayer's salary as too low. The episode is a concrete, step-by-step guide for anyone earning over $60,000 in self-employment income who wants to legally reduce their tax bill without raising audit flags. #SElection #SelfEmploymentTax #TaxSavings #FreelancerTaxes #ReasonableSalary #IRS #TaxCourt #SE tax #PassThroughEntity #SmallBusiness #Finance #Business #TaxStrategy #FexingoBusiness #BusinessPodcast #TaxDeductions #IndependentContractor #SideHustle Keep every episode free: buymeacoffee.com/fexingo