3 Nastiest IRS Taxes That Can Cost You $1000’s

VIDEO TRANSCRIPTION – 3 nastiest IRS taxes that can cost you $1000’s. Tip 2 of 3. What is a constructive dividend? Hi, I’m Steven D. Cooper, also known as Coach Cooper your tax strategies with Coopers Accounting Service because your financial freedom matters 

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Once again, what is a constructive dividend? It is primarily designed for C corporations. It is where one of the owners slash shareholders pays himself a salary, let’s say a hundred thousand dollars, but they paid themselves a dividend two hundred thousand dollars. 

So if they get it get their hand caught in the cookie jar, meaning IRS audit, that dividend can be designed as a constructive dividend. What do you mean by that, Coop? It means that there’s a penalty for this. 

The penalty is technically 50%, 25% of the penalty goes to the individual, the other 25% goes to the corporation. It is a very nasty and punitive penalty because you did not pay yourself what the IRS deems to be a reasonable salary.

We always advise our clients: your dividend should never be more than your payroll.

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