Greetings & Happy New Year!

For the year ending Dec. 31, 2012, my S-Corp. has a gross income of $208,500.00. My salary for 2012 was $111,500.00 (before any bonus). After my salary and expenses, the net income stands at $86,100.00.

Should I take a bonus, say of $30,000, instead of having the entire $86,100 pass to my (100% shareholder) as a distribution?

Because my salary exceeds the $110,100 base wage limit (for 2012) for Social Security, is there any tax benefit to taking a year end bonus vs. letting the entire $86,100 pass through as a distribution?

Are S-Corp distributions (from Schedule K-1) taxed at a different rate than my earnings (salary)?

Naturally, I am trying to follow the proper rules & regulations.

I would appreciate your thoughts on the above.

FYI: I'm a full-time I.T. consultant. To my knowledge (I could be wrong), a software consultant with my years of experience and qualifications, should be around the $120,000 per year range.

Thanks & your advice is appreciated.

HAPPY NEW YEAR!

Sincerely, Robert S.