---

@kwyp wrote:

The net earnings from S Corp is supposed to be split into two parts: W2 income and distribution. 

---

No, the individual taxpayer has earnings from W-2 income and pass-through income from the corporation (the corporation's profit after paying wages).  Distributions are separate.

In other words, the taxpayer will pay tax on the profit of the corporation (after W-2 wages), plus their W-2 wages, regardless of their distributions.