[rsync]

I am aware of this, of course, and always find it interesting ...

According to my own understanding of US tax code(s), one must not reduce their w-2 income to zero - or even relatively small numbers that do not befit their position or responsibilities.

The issue here is that a funding for welfare programs, such as social security, are taken from wage earnings. It is, in fact, preferable for me, as a business owner, to reduce wages to zero and take compensation in the form of dividends or distributions.

But I cannot legally do that. I have been advised by multiple tax professionals that not only can I not do that, but I cannot have a conspicuously low salary. At the very least I need to hit the max social security threshold to avoid scrutiny.

So I always wonder how these $1 and $0 earners make this work on their personal tax returns ...

[SpicyLemonZest]

The $1 earners put a lot more than $1 on their W2s. Zuckerberg for example has $1 salary, $0 stock, and $22 million "other compensation" including security and jet costs.

[rsync]

That's not how a W2 works. All of those other forms of compensation are, of course, in their 1040 but are probably on a K1 or other amendment.

Social security contributions (to pick the most important one) can only come from wage income so the question remains: how are they paying into social security and, if they are not, why is that allowed when it is generally assumed that it isn't ?

[dhimes]

I always assumed that it was because they got paid in dividends, which are taxed at a much lower level. Not an expert though.