Jwright and I agree, I think. But because i'm responsible for the confusion, let me add to the explanation with a longer example...
Suppose that you run a sole proprietorship making $100K in profits. All of that profit will be subject to the 15.3% self-employment tax calculations. (Refer to Schedule SE instructions for details of course...)
Further suppose that you would need to call all of the profits "wages" if you did run the business as an S corporation... Does this mean therefore that you can't save money with an S corporation? No, not necessarily... and the two general reasons are (1) some deductions reduce not just income taxes but employment taxes when you move them to the 1120S tax return... and (2) the IRS doesn't reclassify and can't reclassify profits as wages but only distributions as wages.
So what if you wanted to take this $100K in profits business, turn it into an S corporation, and then categorize $50K as wages. That sort of leaves another $50K that isn't wages and on which you might be able to avoid that 15.3% tax.
Here's how you might be able to make all this work...
1. Suppose in past you've paid $10K of health insurance out of your sole proprietorship profits. If you have the S corporation pay this, it bumps your wages from $50K to $60K... but you still only pay employment taxes on the $50K...
2. Suppose in past you've paid $15K a year for a pension out of your sole proprietorship profits. If you have the S corporation pay this, it uses up $15K of the remaining business profit... but you still only pay employment taxes on the $50K...
Note that after those two gambits, your leftover profit is $25K... I calculate the $25K because we start with $100K, subtract $50K for wages subject to employment taxes, another $10K for health insurance that counts as wages but which isn't subject to employment taxes, and then another $15K for the pension...
At this point, you would still have $25K of "S corporation" profit and that's the amount you might worry about being reclassified as wages if the S corporation pays that $25K out to you. However, if you have the S corporation pay out a $10K charitable contribution, though you still get a K-1 showing $25K of taxable income, that $10K isn't a distribution and isn't subject to reclassification.
Let's further assume that out of that remaining $15K of profit, you leave $5K in the business for working capital and take only that last $10K out... in this case, the IRS could come in and reclassify the $10K if you can't call *any* part of the business profit a return on the investment. But that's pretty unlikely. Note that you will have received $75K of compensation once you add up the base wages, the health insurance and the pension plan... and that you'll have only made a shareholder distribution of $10K
P.S. That $10K charitable contribution doesn't reduce the S corporation's income... but it appears on the K-1 that goes to the S corporation shareholder. The shareholder may be able to add it to his or her 1040. Also that $10K of health insurance gets taken as a self-employed health insurance deduction on the front of your 1040 return.