[veyron]

ordinary dividends are taxed like income. the only difference is that you don't have to pay FICA (social security and medicare) on that money.

This year, self-employment social security is 4.2% + 6.2% = 10.4% up to wage base of 106800 and medicare is still 1.45% + 1.45% = 2.9% --> 13.3%

(the reason why there are two numbers for each part is that there is a portion the "employee" must pay and a portion the "employer" must pay. The Obama payroll holiday only extended to the employee portion.

[triviatise]

you dont pay SS tax but you pay two income taxes. Regular corporate income tax then personal income tax on any distributions.

[veyron]

for a C corp the income taxes are deductible up to a reasonable amount (so its not quite two full income taxes). At a small level, it may more sense to make salary payments rather than dividends (depends on the scale)

last i recall, pub 535 discussed this