Are Board Of Directors Fees Sstb?
The answer to this question may depend on the particular facts and circumstances of the company and the fees being paid. However, in general, board of directors fees are not considered to be a "specified service trade or business" (SSTB) under the new tax law. This means that the 20% deduction for pass-through businesses does not apply to these fees.
The board of directors for a company is responsible for overseeing the management of the company and making sure that it is operated in the best interests of the shareholders. The board of directors is typically elected by the shareholders of the company.
Of course, as with any tax law, there are always exceptions and it's important to consult with a tax professional to ensure that you are taking advantage of all the deductions and benefits to which you are entitled.
The board of directors typically receives compensation for their work in the form of fees. These fees can be paid in cash or stock, and they are typically paid quarterly.
The question of whether or not board of directors fees are considered to be a "passive income" has come up in recent years, especially in light of the new tax laws that were enacted in 2018.
Under the new tax laws, certain types of income are classified as "passive income" and are subject to different tax rates than other types of income. The definition of passive income includes "income from an interest in a partnership or S corporation."
Based on this definition, it would seem that board of directors fees would be considered to be passive income. However, the Internal Revenue Service has not issued any guidance on this issue. As such, it is unclear whether or not board of directors fees are considered to be passive income.
If you are concerned about whether or not your board of directors fees are considered to be passive income, you should consult with a tax advisor.As a nonexecutive director, you contribute your time and expertise to help a company's board of directors make sound decisions. You might also be compensated for your efforts.
The compensations that directors receive for their work are sometimes referred to as "board of directors fees." But are these payments considered to be "income" for purposes of the self-employment tax?
The answer is "it depends." If the payments are made in exchange for personal services that the director provides to the company - such as attending board meetings - then the payments are considered to be self-employment income. On the other hand, if the payments are made simply for being a member of the board, with no expectation of personal services, then the payments are not subject to the self-employment tax.
The IRS has provided guidance on this issue in Publication 334, Tax Guide for Small Business. This publication specifically addresses the issue of whether board of directors fees are subject to the self-employment tax, and it provides examples of when fees are and are not taxable.
In general, the IRS takes the position that if you are receiving payments for services that you provide to the company - even if those services are simply attending board meetings - then the payments are subject to the self-employment tax. However, if you are simply being paid for your role as a director, with no expectation of personal services, then the payments are not subject to the tax.
It's important to note that this is only a general rule - there may be exceptions in specific cases. If you're not sure whether your board of directors fees are subject to the self-employment tax, you should speak with an accountant or tax attorney.
SUMMIT JUNTO IS AN EXCLUSIVE MEMBERSHIP NETWORK OF INTERDISCIPLINARY LEADERS FROM ALL OVER THE WORLD.
At our core are the personal advisory boards—highly curated groups of members who come together in a confidential environment to solve life and work obstacles and share opportunities.
WE BRING TOGETHER LIKE-LEVELED ENTREPRENEURS, CREATIVES, AND INNOVATORS TO SUPPORT ONE ANOTHER TO LIVE THEIR BIGGEST LIFE. WE BELIEVE THAT WHEN YOU BETTER YOURSELF YOU BETTER THE WORLD.
Summit Junto expertly builds groups of 5-7 members, specifically matched based on career experience, diversity of industry, life stage, mentality and goals.
An annual shared experience designed to meet our members and Groups where they are at and provide an ecosystem to grow. Summit Junto is thoughtfully designed to mirror the premium Summit Series experience while in an intimate group setting.
Advisory Boards meet monthly. Our professional facilitators moderate and implement Summit Junto formats designed to foster deep connection amongst members.