Showing posts with label corporation. Show all posts
Showing posts with label corporation. Show all posts

Wednesday, August 3, 2016

What About Taxation?


Since taxes are not voluntary, it is important understand what are the impacts of taxation in our lives. So today I am going to talk about tax models.

There are only three types of entities subject to income taxation in the United States: the individual, the C corporation, and the fiduciary. An individual is a male or female person subject to the tax. A C corporation is a business entity formed under state law on which the income tax is imposed directly. A fiduciary is either an estate or a trust; it may be subject to income taxes, but in most cases the income is passed through to the income beneficiaries and is included in the beneficiaries income for taxation. The fiduciary is a modified "flow-through" entity because the tax may be imposed on income retained by either the estate or the trust, or it may be imposed on the recipients to whom the income is distribuided. 

Individual and corporate taxpayers pay the bulk of all income taxes collected. A business may be organized as a sole proprietorship, a partnership, a limited liability company (LLC) or an S corporation. The income taxes on these businesses are not imposed or paid by the businesses (except for LLCs electing to be taxed as C corporation); instead, at the end of the tax year their income flows through to the owners and the owners pay the taxes.

The income of C corporations is subject to double taxation: once at the corporate level and again at the owner level when the income is distributed as dividends to the owners. The flow-through entities avoid double taxation because their income is passed through at the end of the owners and taxed once only at the owner level.






contact@officetaxservices.com

(858)247-1680




 

Friday, April 29, 2016

Business Car Deduction - Some important points

If you have a business that is a separate legal entity from you, the business may not pay your personal expenses and you personally may not pay the business’s expenses. To this extent, the payments made by the business for your personally owned car should be classified a loan to you.
From there, your business is going to reimburse you for business vehicle expenses one of two methods:
  • It can reimburse you at the IRS standard mileage rate;  OR
  • It can reimburse you for actual expenses
Regardless of the reimbursement method, you need to send proof of the business mileage and all expenses you need to be reimbursed, to your business.

Depreciation expenses for the vehicle may only be deducted by the business if the business owns the title for the vehicle used. You may not deduct depreciation for the vehicle, nor may he deduct fuel, insurance, lease payments or repairs to the vehicle on your personal income tax return, regardless of the percentage the car is used for business purposes.

So, If the business owns the car, it can fully deduct car expenses, subject to dollar limits on depreciation, against its business income. If you, as an employee or shareholder, own the car and use it for business, your expenses are deductible as a miscellaneous itemized deduction to the extent they exceed 2% of your adjusted gross income. And even this deduction may be further limited by the overall reduction in itemized deductions.

contact@officetaxservices.com

(858)247-1680