Do all equity partners (except those in public firms) get paid via a K-1? How massive is the tax hit when paying taxes in all states where the firm does business? Also, how big is the tax hit on having to pay all FICA etc. yourself?

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Ignoring the ridiculous comments above from big 4, genuinely curious of how the profit mechanics work to equity partners on a W-2…. at BCG and others with similar structures.

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Don’t hate us cuz you ain’t us. Brand matters.

FICA is 12.4% of first 176k, plus 2.9% of total income. Do the math on your draw to figure out the bite from that. Taxes in individual states vary, but PTET helps with certain aspects. I'm a B4 partner, so we pay tax everywhere. My firm getting lots of revenue from CA and NY means I lose on total state taxes when compared to my home state. My effective tax rate is way above what it would be if I had a corporate job.

Well, fully deductible to a point. Certain states like CT and MA had to gum up the works. I expect NY to be next.

Thanks P1 and P2. P1, if you include federal, state, FICA, how much effective tax rate do you end up with?

This

Not all firms pay partners via K1. Mainly just the big 4.

Many other firms pay partners via W2.

It’s that structure that allows MBB to give non-Partners profit share.

Which Big4 cannot not structurally do.

Can any MBB equity partners comment on here, do you get both a W2 and K-1 each year, just a W2, or just a K-1?

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