The Peck Group, LC
  • Comprehensive Tax Law Representation Since 1995

    We handle every aspect of tax law: preparing tax returns, representing clients during audits, resolving IRS and state tax controversies, and creating tax planning strategies for the future.

  • Problems With The IRS Or State Tax

    Our attorneys are committed to providing efficient and effective tax solutions for individuals and businesses in Georgia and nationwide.

  • Planning For The Future

    Our lawyers help individuals and businesses with all aspects of estate and tax planning. We help our clients use proactive strategies to minimize tax implications in the future

  • Changing The Balance Of Power

    Does it feel like the government has all the power? Taxpayers have rights, too. We use our knowledge of tax law to shift the balance of power and ensure that your rights are protected.

  • Tax Solutions … And Peace Of Mind

Are there tax benefits to taking a pay cut?

For better or worse, money is at the center of many employment decisions. Overall, the message many people get when it comes to compensation for work is the more, the better.

However, we also know there is such a thing as too much money. In recent years, executives, politicians and other high-profile figures have gotten serious flak for making too much money, according to the public. Now, some people are taking the opposite approach to corporate salaries. Instead of demanding huge paychecks, people like Mark Zuckerberg and the co-founders of Google are volunteering to take a considerable pay cut. 

More specifically, these executives are volunteering to take home a salary of $1 per year.

However, they aren't exactly taking home nothing. There is a strategy behind this trend of taking a massive pay cut. Zuckerberg, for instance, continues to make money through stock growth and capital gains. These non-cash options allow employers and executives to continue making a healthy living and prioritizing the success of a business without collecting a massive paycheck.

There are also some serious tax benefits for people in Zuckerberg's position. As discussed in this Forbes article on the subject, his money from capital gains and stock growth are subject to more favorable tax obligations than salary and bonus pay.

However, before you decide to eliminate your own salary as a business owner or executive, it is crucial to understand that this strategy isn't always going to be in your -- or your company's -- best interests.

Tax obligations vary based on factors like actual pay, business expenses, deductions allowed based on business type and whether a company is private, public or closely held. In some cases, choosing to earn $1 can be harmless; in others, it can result in extra taxes.

Before you make any decisions about pay cuts and pursuing non-cash options, it can be crucial that you first examine the tax implications with your attorney. These decisions are enormously complex and one mistake can land in hot water with the IRS.

No Comments

Leave a comment
Comment Information
Email us for a Response

Talk to an Attorney

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

The Peck Group, LC
5855 Sandy Springs Circle N.E., Suite 190
Atlanta, GA 30328

Phone: 770-884-6914
Fax: 770-933-2369
Atlanta Law Office Map

Payment Cards