Skip to main content














 

Comments

Post a Comment

Popular posts from this blog

NET INVESTMENT INCOME TAX (NIIT) OR "OBAMA" TAX

  For high-income taxpayers, dealing with a regular income tax rate of 35% or 37% can be challenging. On top of that, there's an extra 3.8% net investment income tax (NIIT) to consider. The good news is that there are ways to minimize its impact. Who's Affected? The NIIT applies if your modified adjusted gross income (MAGI) exceeds specific thresholds: $250,000 for married taxpayers filing jointly and surviving spouses, $125,000 for married taxpayers filing separately, $200,000 for unmarried taxpayers and heads of household. The taxed amount is the lesser of your net investment income or the excess of your MAGI over the applicable threshold ($250,000, $200,000, or $125,000). What's Included in Net Investment Income? Net investment income encompasses interest, dividends, annuities, royalties, and rental income—unless they're part of an active trade or business. Passive activity income from a trade or business and income from trading in financial instruments or commoditie...
Post a Comment
Read more

ALL ABOUT SMALL CORPORATION AND ITS ADVANTAGES

  Owning a small business without incorporation can lead to hefty self-employment (SE) tax bills, and that's never pleasant. In 2023, the SE tax hits you hard at 15.3% on the initial $160,200 of net SE income. This includes 12.4% for Social Security tax and 2.9% for Medicare tax. The Social Security tax ceiling has risen to $160,200 from $147,000 in 2022, and this upward trend is expected to continue due to inflation. Beyond this ceiling, the Medicare tax persists at 2.9% before climbing to 3.8% for higher net SE incomes, thanks to the additional 0.9% Medicare tax on all income. Enter the S corporation advantage. In 2023, S corporation employees, including shareholder-employees, face a FICA tax wage withholding rate of 7.65% on the first $160,200 of wages—6.2% for Social Security tax and 1.45% for Medicare tax. Once past $160,200, the rate drops to 1.45% because the Social Security tax no longer applies. However, the 1.45% Medicare tax persists and increases to 2.35% for higher com...
Post a Comment
Read more