Posts Tagged ‘medicare tax’
Despite higher tax rates, S corporations retain advantages over C corporations
Posted on: February 10, 2014
(I got this from Cal Klausner, a CPA friend of mine.)
After recent tax changes, owners of small businesses face a question: Should the business continue to function as an S corporation, or should the entity revoke its election under Subchapter S of the Code?
Despite a number of statutory constraints, conventional wisdom has generally favored an S corporation classification. An S corporation is a pass-through entity whose shareholders are subject to personal income tax based on the income of the corporation. A C corporation, by contrast, is taxed as a separate entity at corporate rates, and its distributions to shareholders are subject to the personal income tax. A small business corporation electing under Subchapter S may have no more than 100 shareholders, and may not have more than one class of stock. There are no similar constraints on C corporations. Nevertheless, an S corporation classification provides business owners a superior degree of flexibility and is therefore generally preferred. Specifically, by having its income flow directly to its shareholders, an S corporation is not subject to the double taxation that a C corporation may be unable to avoid.
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[Adapted from my post on Physicians Practice]
“Laws are like sausages …” Otto Von Bismarck, First Chancellor of Germany
Doctor and Monday
The last Congress, the one that received a “Shellacking” in November election, was actually very good at making “sausages.” As the result, there are many tax law changes that have come into effect. I asked the tax specialist in my wealth management network to give me a list of tax law changes in 2010. As I went through the list, I identify these seven that are relevant to physicians and their practices.
Don’t take this as legal or tax advice; don’t even take this as complete information. To avoid putting you to sleep before you get to item 7, I simplify much legal minutia. Consult your own tax and legal experts before using any of these:
- If you have a practice of less than 25 employees, you maybe qualified for health insurance credit. Read the rest of this entry »
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Investment Tax Hike One-Two Punch
Posted on: June 5, 2010
Most wealthy Americans (those in the top two tax brackets) are not aware that taxes on their investments will get a bump in 2011, and again in 2013. The first one is due to the expiration of Bush tax cuts; the second is due to a 3.8% new “Medicare” tax on investment incomes.
The following table sums up the investment tax increases for the top-bracket taxpayers. Read the rest of this entry »
The Investment Scientist 