4 ms·
Huh? If a C-corp makes $200k and pays out $100k as salary to the sole owner/shareholder and keeps $100k in the business, the shareholder will pay payroll taxes
by nodamage 10y ago
Huh? If a C-corp makes $200k and pays out $100k as salary to the sole owner/shareholder and keeps $100k in the business, the shareholder will pay payroll taxes and personal income tax on that $100k salary, and the corporation will pay corporate income tax on the remaining $100k.
OPs characterization seems correct to me. (That you pay taxes once at the corporate level, and once at the personal level.)
- bildung 10y agoYou pay once at the corporate level and once at the personal level, but apparently not twice on the same dollar (which was how I understood tvladeck's comment).
- rpedela 10y agoThe C corp's money is not owned by the shareholders until it is distributed as a dividend. That is where the double tax comes into play since that money was already taxed at the corporate level and then it will be taxed again at the personal level.
- rrggrr 10y agoDouble taxation means twice on the same dollar. The $100k in the business gets taxed at the business rate once. Its never taxed again unless distributed as dividends, unless you count payroll taxes if paid out as salaries.