Options
S corp tax changes that may effect you
seateddime
Posts: 6,180 ✭✭✭
If you run an S corp you find a big small business tax hike next year, where as now you can take a smaller salary and the rest as a capital draw, next year you will be paying your tax rate +15% more for all the income, even if you don't take the money out.
I am not a CPA but I suspect many here will be great effected by this soon to be signed law.
I am not a CPA but I suspect many here will be great effected by this soon to be signed law.
I seldom check PM's but do check emails often jason@seated.org
Buying top quality Seated Dimes in Gem BU and Proof.
Buying great coins - monster eye appeal only.
Buying top quality Seated Dimes in Gem BU and Proof.
Buying great coins - monster eye appeal only.
0
Comments
]Ensuring collection of employment taxes earned by certain service professionals. Social Security taxes are imposed on compensation and self-employment income up to the Social Security Wage Base (currently $106,800) and the Medicare tax is imposed on all self-employment and compensation income. Some service professionals have been avoiding Medicare and Social Security taxes by routing their self-employment income through an S corporation. These taxpayers then pay themselves a nominal salary and take the position that the remaining earnings are exempt from employment taxes. The bill would address this abuse in situations where (1) an S corporation is engaged in a professional service business that is principally based on the reputation and skill of 3 or fewer individuals or (2) an S corporation that is a partner in a professional service business. The bill would also clarify that individuals that are engaged in professional service businesses are unable to avoid employment taxes by routing their earnings through a limited liability corporation or a limited partnership.
Please do not start tax related threads until you have all of the facts. It only leads to needless panic and confusion.
"Seu cabra da peste,
"Sou Mangueira......."
Government is the great fiction through which everybody endeavors to live at the expense of everybody else. - Bastiat
Since dealers don't really get along with others, it's clearly related to S-corps with 3 or fewer members.
Government is the great fiction through which everybody endeavors to live at the expense of everybody else. - Bastiat
<< <i>NOT TRUE Below is text copied verbatim from the bill which passed. What it basically says is that if you're a professional service corporation comprised of three professionals or less, either you pay yourself wages equal to or exceeding the current FICA max, or net income making up the difference between the W-2 wages and this amount will be treated as wages for FICA and Medicare purposes. This is targeted at the incorporated doctor, lawyer, etc., who nets $400,000 and gives him / herself a W-2 for $10,000.
]Ensuring collection of employment taxes earned by certain service professionals. Social Security taxes are imposed on compensation and self-employment income up to the Social Security Wage Base (currently $106,800) and the Medicare tax is imposed on all self-employment and compensation income. Some service professionals have been avoiding Medicare and Social Security taxes by routing their self-employment income through an S corporation. These taxpayers then pay themselves a nominal salary and take the position that the remaining earnings are exempt from employment taxes. The bill would address this abuse in situations where (1) an S corporation is engaged in a professional service business that is principally based on the reputation and skill of 3 or fewer individuals or (2) an S corporation that is a partner in a professional service business. The bill would also clarify that individuals that are engaged in professional service businesses are unable to avoid employment taxes by routing their earnings through a limited liability corporation or a limited partnership.
Please do not start tax related threads until you have all of the facts. It only leads to needless panic and confusion. >>
Actually that is exactly what I said.
If you make $100,000 and pay yourself $25,000 you just got a extra $10,500 of tax, $100,000 is far from rich and taking an extra $10,500 is huge. It puts your tax rate at about 50% for a person who is well below the $250,000 you keep hearing won't be taxed.
Your point is looking at the extreme level of what some people do. Most small business owners pay themselves more than 2 1/2% of what their company earns.
Buying top quality Seated Dimes in Gem BU and Proof.
Buying great coins - monster eye appeal only.
This rule does not affect coin dealers BUT does affect many of THEIR clients!
<< <i>coin dealers that operate as an s corp are NOT professional service corporations.
This rule does not affect coin dealers BUT does affect many of THEIR clients! >>
Oreville, why are coin dealers that operate as an s corp NOT professional service corporations? Thanks.
An authorized PCGS dealer, and a contributor to the Red Book.
Licensed coin dealers...that's a good one.
Please do not start tax related thread, period (unless they are about 1099s