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I am 50% owner of an s-corp which had a profit last year. I did not take any distributions or bonuses but the profit was passed on to me since the business is an S-corp. First question, how do I determine the amount that this affected my personal taxes and can the business reimburse me for it? Secondly, how do I account for it so it doesn't look like a distribution or get taxed again this year?
To figure out your personal tax liability for the S-corp's profit, you need to know which marginal tax bracket you are in. If you are in, say, the 25% bracket, then for each dollar of profit from the S-corp (as reported on your K-1), you owe 25 cents in taxes.
The business can't reimburse you (strictly speaking) for your taxes, but you can take a distribution to pay those taxes -- you don't get taxed on the distribution, because you've already paid the tax on the corporation's profit from which the distribution is drawn (that's the benefit of an s-corp).
Thank you very much for the clear explanation, its what I figured for the personal tax liability but had no clue that the "reimbursement" had to be done as a distribution, so thank you very much for helping out!
Another way to think about your share of an s-corp's profits: it's your money, you've already paid the taxes on it -- it is just sitting in the corporations bank account instead of yours. Transferring the money from the corporation's bank account to yours is called a "distribution" but it is not a taxable event; it is only recorded in the books of the corporation (showing up on the balance sheet), not reported to the government.