SCorp Shareholders have a set salary with a portion withheld for 401(k) elective deferrals that reduce Box 1 wages but added in to Box 5.  They also have SCorp medical insurance as a provided benefit included in their box 1 wages but not in Box 5.   I am trying to book Shareholder payroll to match W-2 Box 1 wages, not Box 5 wages on the 1120S. I was told that you can not book the higher wages reflected in Box 5 as the corporate salary expense on the P&L because the Shareholders can not "double dip" by having the Net income distribution on the K-1 reduced by the deferrals and also have their Fed/state taxable wages Box 1 on the W-2 reduced by the deferral.   If you can not include the Gross wages (salary plus deferral) as Shareholder Salaries where do you record this?  It is a Corp disbursement.  There is no employer matching at this point. 

Any help would be so appreciated!