Corporate Income Tax Explained

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Corporate Income Tax Explained
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• For new business owners or anyone entering the
  corporate world for the first time, corporate
  income tax can seem like a minefield. Lets look
  at it in a little more detail
• What is Corporate Income Tax?
• Corporate income tax is an entity-level tax
  applying only to C corporations. Corporate
  profits can also be subject to another, second
  degree of taxation at individual shareholder
  level, on dividends when distributed and on
  capital gains from the sale of shares. The
  highest tax rate on dividends and capital gains
  is at 23.8 now, which includes the 3.8 tax on
  net investment income.

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• There are many businesses based in the U.S. who
  are not subjected to this income tax, and instead
  are taxed as what are called flow-through
  entities. These businesses dont face entity
  level taxes, but the owners of these businesses
  are required by law to include their allocated
  share of the profits in their taxable income
  under the individual income tax.
• Flow-through entities can be sole
  proprietorships, partnerships and corporations
  that are eligible and choose to be taxed under
  subchapter S of the Internal Revenue Code (S
  corporations).

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• Taxable corporate profits explained
• The profits of US resident corporations are
  subject to taxes at rates that are graduated,
  from 15 up to 35, and most corporate income
  falls into the maximum rate.
• Taxable corporate profits are those that are
  equal to the receipts less allowable deductions
  of a corporation, and can include anything from
  sold goods, to wages, employee compensation,
  depreciation and advertising.

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• Residents of the U.S. who are multinationals are
  required to pay tax on their profits made
  worldwide, but the taxable profit from their
  controlled foreign subsidiaries is deferred until
  those profits are paid back as dividends to the
  parent corporation in the U.S. Double taxation
  can be avoided by U.S. multinationals being able
  to claim a credit for taxes paid to foreign
  governments on income that was earned overseas,
  but only up to their U.S. tax liability on that
  income.
• Corporations that are based in the United States
  but are owned by foreign multinational companies
  are subject to the same U.S. corporate tax rules
  on their profits from business undertaken in the
  U.S. as U.S. owned corporations.

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• Corporate income tax in the U.S. is the third
  largest source of federal revenue after income
  taxes applying to individuals and payroll taxes,
  and in recent years has brought in revenues equal
  to around 2 of GDP with minor fluctuations.
• At Heyer Associates, we proactively assist our
  individual and small business clients in meeting
  their goals. Our key area of focus is ensuring
  that our clients remain compliant with federal
  and state tax laws by providing them with high
  quality accounting and tax services Miami Beach.
  If you are looking for individual tax preparation
  in Miami Gardens, Heyer Associates would be a
  right option.