Self-employment tax

[Justin Van Riper]

Can you get out of paying self-employment tax if you wholesale full-time? Also, what if this is not the only aspect of your business (also own rentals)?

[Ned Carey]

One way to reduce self employment tax on flips is to use an S-corp or an LLC taxed as an s-corp.

Some of the money you make in the s-corp can be received as dividends as opposed to earned income. You do not pay SE tax on the dividends. However you have to keep it within reasonable limits. You can't call all your income dividends or the IRS will disallow it. Talks to your CPA for details.

PS: an S-corp may not be the best for other types of real estate.