SCorpDesk / 2026 S-Corp & QBI Guides / S-Corp 60/40, 50/50 & 30/70 Salary Rules: What Actually Survives an IRS Form 1120-S Audit?
S-Corp 60/40, 50/50 & 30/70 Salary Rules: What Actually Survives an IRS Form 1120-S Audit?
Is there an official IRS 60/40 or 50/50 S-Corp salary rule?
No. The IRS does not recognize a fixed 50/50 or 60/40 percentage split by statute; instead, auditors evaluate replacement-cost wages for the specific hours and services you perform. However, keeping your W-2 salary ratio between 35% and 50% of net profit (supported by BLS wage data and an annual Board Resolution) keeps DIF audit risk low.
No. The IRS does not recognize a fixed 50/50 or 60/40 percentage split by statute; instead, auditors evaluate replacement-cost wages for the specific hours and services you perform. However, keeping your W-2 salary ratio between 35% and 50% of net profit (supported by BLS wage data and an annual Board Resolution) keeps DIF audit risk low.
Frequently Asked Questions
Is there an official IRS 60/40 or 50/50 S-Corp salary rule?
No. The IRS does not recognize a fixed 50/50 or 60/40 percentage split by statute; instead, auditors evaluate replacement-cost wages for the specific hours and services you perform. However, keeping your W-2 salary ratio between 35% and 50% of net profit (supported by BLS wage data and an annual Board Resolution) keeps DIF audit risk low.