S-Corp Reasonable Compensation Calculator

WageProof’s isn’t free, and that’s deliberate. The salary figure and the documented report unlock together when you pay: $199 for a single report, with volume plans for CPAs and tax pros who run them for clients. A complete sample report is free to download first, no email required, so you can see exactly what you’re buying. A free one-number 'calculator' that applies a percentage of profit says nothing about your duties or what comparable businesses pay for similar work, and the IRS fact sheet on S corporation officer pay lists both among the factors courts have considered.

It uses the methods the IRS recognizes: it breaks your role into tasks (the Cost Approach) or matches your overall role to a comparable occupation (the Market Approach), prices each against BLS Occupational Employment and Wage Statistics data for your local wage area, and reads each wage at the percentile our method assigns to your experience level. The result is the market wage for the work you actually do.

Your business location (for the right local wage data), a description of your duties and how your time splits across them, and your experience level for each. That’s enough to produce a defensible estimate — you don’t need to enter revenue or upload financials to get a number.

The figure is built from published BLS wage data matched to your duties, and the report documents every source and the methodology behind it. The IRS’s job aid for its valuation staff suggests asking whether a company keeps records, made at the time, of how pay was set, and whether salary surveys or comparables were used; a report run when you set the salary is that kind of record. Reasonable compensation is a facts-and-circumstances determination, so no tool can guarantee an audit outcome, but a documented number is far stronger than a guess. It is not a substitute for advice from your own tax professional.

No tax law, regulation or IRS guidance sets the 60/40 rule or any other fixed split between salary and distributions, and the IRS’s fact sheet on S corporation officer pay says courts decide reasonable pay on the facts and circumstances of each case. This calculator doesn’t use a ratio. It values the actual work you do against real market wage data, to answer the question the regulations ask: what would ordinarily be paid for like services by like enterprises under like circumstances.