Taxes & Tax Prep

Q: Can I avoid self-employment tax on partnership profits by having an S-Corp own my LLC interest? A: Yes – if structured correctly. The S-Corp pays you a reasonable salary (subject to payroll tax) and passes the remaining income as distributions that escape self-employment tax. But the entity must have real business purpose, pay reasonable […]

Q: Can I avoid my home-state income tax by registering my business in a no-tax state like Wyoming or Nevada? A: No. Your resident state taxes income where you live and work, regardless of where the entity is registered. Only changing legal residency and shifting business activity can eliminate that tax. TL;DR: Pass-through income follows […]

Q: How do I determine a “reasonable salary” for my S-Corp? A: Start with what you’d pay an unrelated employee to do your job, then adjust for profit, duties, time spent, and local market data. Pay at least that amount as W-2 wages; treat the rest of the profit as distributions. Too low invites IRS […]

Q: Can I deduct expenses that provide a personal benefit – like business suits, cosmetic work, therapy, or pet care? A: Almost never. The IRS allows a deduction only when a cost is both “ordinary & necessary” for the business and provides no personal benefit that’s adaptable to everyday life. Rare exceptions exist but require […]

Q: Does moving income through a licensing agreement between my S-Corp and a C-Corp safely reduce tax? A: Only if it’s real. The deal must serve a bona-fide business purpose, charge arm’s-length royalties / commissions, and be fully documented – otherwise the IRS can disallow the deduction and you could end up paying tax on […]

Q: Does pairing a C-Corp with an S-Corp actually lower your overall tax bill? A: Only in narrow cases. Splitting income lets you defer the second layer of C-Corp tax, but you must leave profits inside the C-Corp for years and avoid Accumulated Earnings Tax penalties. TL;DR Defers double taxation only if profits stay in […]

Q: Does the 21% corporate tax rate make a C-Corp cheaper than an S-Corp? A: No. After double taxation and lost pass-through benefits, most owners pay more overall with a C-Corp. TL;DR Corporate tax (21%) plus dividend tax (up to 23.8%) usually exceeds a top-bracket S-Corp rate. You lose the 20% QBI deduction and state […]

Q: What happens to my taxes when the Tax Cuts and Jobs Act expires after 2025? A: They almost certainly go up. The 20% QBI deduction vanishes, tax brackets shift higher, AMT thresholds plunge, the standard deduction shrinks, and dozens of “temporary” breaks end – unless Congress extends the legislation. TL;DR QBI gone. Pass-through owners […]

2025 and all of its tax deadlines are upon us! Below is a quick guide of the most important dates to keep in mind this calendar year. January 15th: due date to pay 4th quarter estimated taxes. January 31st: Due date to send out 1099s and W-2s to recipients. Due date to file 1099-NECs and […]

2024 and all of its tax deadlines are upon us! Below is a quick guide of the most important dates to keep in mind this calendar year. January 16th: due date to pay 4th quarter estimated taxes. January 31st: Due date to send out 1099s and W-2s to recipients. Due date to file 1099-NECs and […]

2017 and all of its tax deadlines are upon us! Below is a quick guide of the most important dates to keep in mind this calendar year. Take a careful look as quite a few deadlines have changed this year! January 17th: due date to pay 4th quarter estimated taxes. January 31st: Due date to send […]

“Money is an opportunity for happiness, but it is an opportunity that people routinely squander because the things they think will make them happy often don’t”– EW Dunn Graduating from college is one of the most significant life achievements in many people’s lives. Especially in the life of a young person – it very likely […]