Did you end up paying more in taxes as a K-1 equity partner versus a W2 pre-partner? Overall, which status has more of a tax burden? Any other expenses to compare?

likehelpful
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You 100% pay more taxes as an equity partner. You pay taxes on phantom firm income, including disallowed business deductions and you have timing differences on things like depreciation that could take years to reverse. Also, don't forget that you pay both halves of FICA and, at my B4 firm, you also no longer get subsidies for insurance - not a tax, but it's a big additional number. It's still worth it, but I answered your question as asked.

likesmart

Thanks. I think one way to think about this is what portion of the marginal income dollar do you get to keep, as you move from W2 to K1. Yes its more income but the marginal dollar attracts more tax as a K1 dollar.

They tax your tushes off. Always have and always will. K-1 hit hardest but if the Feds don’t get you, NY or Cali will.

likehelpful

If the thunder don’t get you then the lightning will…

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K-1 sucks, unless you get lots of shares.

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