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As an LLC, you have to pay 14 percent of all your income to social security. As a Corporation, you can claim a portion of the income as a salary and pay the Social Security tax on it.

For federal tax purposes, any LLC can elect to be treated as a corporation. What other tax treatment options are available depend on whether the LLC has one or more members.

I did consulting for several years as a single member LLC. The paperwork/cost of getting setup was negligible and made contracting through various companies easy. There's a lot of contract gigs available, and you can get a larger percentage of the rate if you do them as 1099 instead of W2 contracts. That becomes important if any of the part time gigs end up becoming your primary source of income.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Single-Member-Limited-Liability-Companies

Now that we've all had a good chuckle at this it turns out that these awarded damages ARE taxable. From irs.gov:

Court awards and damages. To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. The character of the income as ordinary income or capital gain depends on the nature of the underlying claim. Include the following as ordinary income.

......

5. Damages for:

Patent or copyright infringement

So I suppose the US government is getting SOMETHING out of it, though relatively paltry. I also reckon this tax can't be passed down to the paying party much like sales tax is, which just makes me want to imagine some corporate peon somewhere getting absolutely burned up over it.

Also, here is an IRS training guide [pdf] that explains in great detail the differences between employees and contractors.

Damn. That link got lost somehow.

Here is the IRS link that was supposed to be included above.

It is appearing to me more and more, as I learn about the "tagging" practices and stories like this, as though Google is illegally employing people as "contractors" when they are really just low-level employees.

This has been a long-time problem with large corporations. IBM was famously caught at doing that, and so was Microsoft.

The IRS has pretty clear guidelines about who is a "contractor" versus who is an "employee".

It appears pretty clear to me that Google is illegally calling employees "contractors" so they can be denied perks and benefits. Just like IBM was, and just like Microsoft was.

Another clueless fucking idiot. Child tax credit _REDUCES_ the amount of taxes you pay for to IRS, not give you money back. And is only $1k/child.

Seeing that most states have sales tax of between 5%-12%, are you saying that this family with 5 children are living on $20k/year? That's below the fucking poverty line - and you still want to tax the shit out of them? You are a heartless bastard in addition to being a fucking idiot and a damned liar.

So, to summarize: Child tax credit does not give you money, only reduces your tax burden to IRS. And you're a fucking idiot.

http://www.irs.gov/newsroom/article/0,,id=106182,00.html

They have a $1 salary because salary is taxed at the higher rate reserved for the lower class. The CEO's get all their compensation in the form of stock options, and that is taxed at the lower rate reserved for the gentry

Do note that to pay more in income tax than the 15% long-term capital gains tax rate, you need to make at least $54,575. Other deductions and exemptions will push the threshold income level even higher.

$5,950 tax-free as standard deduction
next $8,700 taxed at 10% ($870)
next $26,650 taxed at 15% ($3997.50)
next $13,275 taxed at 25% ($3318.75)
= $54,575 in income, $8186.25 in taxes, or 15%

Yes the 15% capital gains tax rate is lower than the higher income tax brackets. But it's still significantly higher than the 12.8% the average taxpayer pays (2009, column T). Based on the IRS stats, the adjusted gross income at which a tax filer pays an average of 15% in income tax is somewhere around $160,000.

Do I think it's right that rich CEOs are only paying 15%? No. But the lower class does not have a "higher rate" reserved for them. They pay substantially less than 15%. Basically, the $1 salary tax dodge takes CEOs from taxation rates meant for people making over about $200k, and puts them at taxation rates meant for people making about $160k. The savings in terms of tax rate is a big deal (about 25% down to 15%), but the savings in terms of tax bracket is not (moving from the 99th or 98th percentile to about the 93rd-95th percentile).

"How do these two things go together? Who made the legal ruling that Scientology is a religion if the United States Supreme Court can't do it?"

Repeat: THEY DON'T HAVE TO BE "RULED" BY ANYBODY TO BE A RELIGION, IN ORDER TO BE ONE IN THE UNITED STATES!

And I also repeat: this is the fundamental thing that you are not understanding.

Look. I'm not trying to be condescending, I'm trying to explain. There is a legal difference -- and a very big one -- between a religion and a Church.

A "church" is an institution that practices or teaches religion. A church can be for-profit or non-profit. If it is non-profit, then it is also non-taxable.

For-profit institutions, in the past, were often not considered "churches" by the IRS, and were therefore taxed. But the Supreme Court decision in regard to whether the Universal Life Church could call itself and be tax-exempt, because the IRS did not feel it qualified for 502(c)(3) exemption. See this IRS document which states on page 4 exactly what I have already told you: "In fact, the Supreme Court has ruled that government has no authority to pass on the legitimacy of a religious belief or to define permissible religious belief."

So... it is your ACTIONS, whether or not they be criminal, and in some cases your profit motive, in which case you might not be a 501(c)(3) eligible Church, that determine whether you are prosecutable or taxable.

But NONE of that has ANYTHING to do with whether you are (or are a member of) any particular religion.

I stand corrected. Although if the total of your mortgages is less than $1m you can claim the deduction on the interest of your 2nd home. You can rent this 2nd home out provided you live in it at least 10% of the time you rent it out for each year.

SS benefits are taxed as well

The may be taxable, if you earn income from other sources which puts you above the threshold ($25k or $32k). But I'm betting that a significant portion of the 40-47% who "pay no federal taxes" are retirees drawing SS and not much else.

this crap drives me crazy. Obama proposes a tax on people that make over $250k. Cut to endless footage of people that making $50k a year protesting that this is going to break them.

None of this is secret. Go play with the IRS tax statistics. See how much we'd have to raise the tax rate on those making >$250k to pay for the current deficits.

The bulk of the U.S. income base (nearly 52% in 2009) is in the $50k-$200k. The $200k+ brackets account for just 26% of income, 12% of which is the $200k-$500k bracket, meaning a $250k cutoff reduces that percentage significantly. Collectively, those making $200k+ had $1.96 trillion in income, of which they paid $434 billion as income taxes (an effective 22% income tax rate vs 13% for the country overall). Last year's budget deficit was $1.56 trillion. To pay for the budget deficit with only tax increases on those making $200k+ would require raising their effective income tax rate to 80%.

Obama's pledge to raise taxes only on those making $250k+ was just a campaign promise to get himself elected by ingratiating himself to a large percentage of voters. Any realistic budget reform has to include raising taxes on the $50k-$200k bracket, and/or significantly cutting Federal spending. Especially if we want to pay down the debt, not just eliminate deficits. It's the 21st century. Any time a politician makes a promise like this, the first thing you should be doing is googling the various fiscal statistics to see just how realistic the plan is.

As an individual, you can also donate to a PAC or form one, if you wish.

As an individual, I am allowed to donate $5000 per election to a PAC. A single cent more and the feds haul me off to jail. You might notice $5000 is quite a bit lower than the contribution limit for corporations. The corporations and I each have our First Amendment rights, but I can't shake the feeling that their rights are a lot stronger than mine...

...or form one, if you wish.

Of course if I form my own corporation and super PAC I can get as set of extra rights as all the other corporations. But what about everyone in the country who don't currently control a corporation?

Or you can spend your own money to advertise whatever views you want, just like a PAC does.

Still subject to the same contribution limits. The FEC isn't stupid you know.

"I can't donate more than $2500 so I should just buy a million dollar TV spot for my favorite candidate." is basically the equivalent of "I don't have to pay income tax anymore if my employer pays me in houses." In the latter case, IRS considers the house barter income and value it at the market value. If you failed to declare that income, you go to jail. In the former case, the FEC considers the commercial a donation and value it at the market value. If it's more than $2500, you go to jail.

*statists will recommend overcoming the problem you note, not by eliminating the "special protections", but by the government offering incentives to employers to hire members of the "protected" groups.

Indeed they will, but these incentives will also fail to achieve their desired result which is greater employment of the "protected" groups. Consider a recent example of such incentives here in the United States, tax incentives for businesses which hire workers unemployed for six months or more. What has been the result of this policy over the past year? The unemployment rate has remain largely unchanged and even ticked slightly higher in more recent months. The favored groups, the long term unemployed in this case, have benefited only very modestly or more probably not much at all from these incentives. So what now? Shall we double down on the failed policies of the past or do we look instead to new leadership in 2012? It's a choice I leave to you, dear reader.

You know the Barter System is still a good way to do some business and non taxable :)

In the United States, barter "income" is taxable, see Bartering Income

I dunno where you get your accounting advice but bartering IS taxable. The thing is you are also more likely than ever to have to pay taxes for such things.

http://www.irs.gov/businesses/small/article/0,,id=187920,00.html

Your friend is a thief, stealing money from the government that provides you so many services that you use constantly.

Your friend is a thief, stealing money from the government that provides you so many services that you use constantly.

To all the cretinous imbeciles suggesting this is a way to avoid taxes, you better stop misleading the rest of slashdot readers: http://www.irs.gov/businesses/small/article/0,,id=187920,00.html

Nobody gives a shit! Only smarmy apple-polishing turds actually calculate tax for stuff they traded informally. The government only has that law on the books at all to convince dorks like you to give them extra money. (and sometimes if they want to "get" somebody, it's nice to have a plethora of laws that virtually everyone falls afoul of.)
  They know nobody in their right mind is going to try to figure out what the fuck the tax would be on that time they gave a sack of tomatoes to their neighbor Steve in exchange for him replacing that leaky brake line on their car.

To all the cretinous imbeciles suggesting this is a way to avoid taxes, you better stop misleading the rest of slashdot readers: http://www.irs.gov/businesses/small/article/0,,id=187920,00.html

Are you retarded? Barter is taxable, and if you don't pay tax on barter, you're breaking the law just as much as if you avoid it for monetary income. http://www.irs.gov/businesses/small/article/0,,id=187920,00.html

No tax, you say? Barter is taxable, just like anything else, and if you're not paying tax on items you barter, you're carrying out a criminal offense. http://www.irs.gov/businesses/small/article/0,,id=187920,00.html

You're either a troll or an idiot--barter is taxable, just like any other transaction: http://www.irs.gov/businesses/small/article/0,,id=187920,00.html

Uh, income from barter is taxable, so get off your high horse. http://www.irs.gov/businesses/small/article/0,,id=187920,00.html

You need to file form 1099-B to report bartering income.. Enjoy paying tax to the government for that old cutlery you don't even want...

I'll try to find the birth tax.

The death tax, 'you' are still getting taxed. It's your money even though you're dead. That still counts as a tax in my book.

So if you make more than 91k you get taxed. So, yes you do get taxed abroad.

Expatriation Tax

Some interesting bits around this:

According to https://en.wikipedia.org/wiki/Renunciation_of_citizenship
Effective June 2008, U.S. citizens who renounce their citizenship are subject under certain circumstances to an expatriation tax, which is meant to extract from the expatriate taxes that would have been paid had he remained a citizen: all property of a covered expatriate is deemed sold for its fair market value on the day before the expatriation date, which usually results in a capital gain, which is taxable income

and those conditions are listed here: http://www.irs.gov/businesses/small/international/article/0,,id=97245,00.html

If you expatriated after June 16, 2008, the new IRC 877A expatriation rules apply to you if any of the following statements apply.
        Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than a specified amount that is adjusted for inflation ($145,000 for 2009 and 2010, $147,000 for 2011, and $151,000 for 2012).
        Your net worth is $2 million or more on the date of your expatriation or termination of residency.
        You fail to certify on Form 8854 that you have complied with all U.S. federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency.

I know he mentioned sales tax but at least for income tax you are supposed to pay tax on the fair market value. But yeah, who in there right mind would do that. Bartering has value, it's just that a currency representing that value was not exchanged. Currency doesn't have value, it just represents it.

1099C http://www.irs.gov/pub/irs-pdf/f1099c.pdf

No, it is Free Fillable Forms. http://www.irs.gov/efile/article/0,,id=237156,00.html

The government does...kind of. Intuit provides a service linked from the IRS website that allows almost all filers, regardless of income, to file electronically for free. The catch is that the experience is almost as no frills as it gets: it's like filling out the paper form, line by line, on your computer, with minimal computational aids (steps that tell you to add line X with line Y can be done for you, but EVERYTHING ELSE, such as computing your tax, you have to do it with the benefit of the instruction manual).

I don't really think the major companies are afraid of getting put out of business by this. The target market for this product are the people who were doing their taxes by hand to begin with. If you didn't do them by hand on paper, you aren't using this product.

It appears they're not - my mistake. I was somehow under the impression that the tax records went public after a time.

Further reading here on the irs website, prompted by yours & and alexander_686's response disabused me of the notion.

I learned something new today!

It's the 1040-EZ, but it's very limited use.

http://www.irs.gov/pub/irs-pdf/f1040ez.pdf

You can always file electronically right from the IRS site: http://www.irs.gov/efile/

For me, it's SO worth the extra 20 bucks or so to just have everything done online through a browser-driven tax software. As far as Taxact having my data.... well, they've had it the last 5 years running and I can access it anytime I want to (mortgage info, daycare stuff, SSNs for my kids, etc). Sure, I have all that stuff in my safe, but I can just log in and snag a couple of PDFs no matter where I am. Since I have to provide this info to banks every time I make a mega-major purchase, anyway, I really don't care if Taxact has it too. At least I can access the whole dataset at will.

Edit: "this one works for filing up to $57K" : http://www.irs.gov/efile/index.html
    sorry~!

If your main criteria is "freely available" and not "open source", and your adjusted gross income is less than $57K, you can just fill out the forms for free. It uses Adobe Flash if you have an aversion to such things, and there doesn't appear to be anything open source about it.

If your AIG is more than $57K, your tax situation is probably such that you ought to be handing over some money to a pro or Turbo Tax.

@sjhillman .. "freedom edition" +1 informative
@AC "FUD" -1 NOT
@Loughlia " ...can send you to jail" .. You do realize it is much more likely that you'll just get an interest-bearing permanent debt.
            The IRS and Student Loan providers will work backwards from your Social Security death benefit of $300-ish if they have to. Only in rare cases, where the headlines serve a purpose more than the recovery of the money, - or if there is malice or fraud, does someone actually get jailed on taxes.

and .. the IRS will help with your taxes, also for free.
    http://www.irs.gov/newsroom/article/0,,id=202121,00.html .. and the IRS offers links to other "free" filing services, this one works for income up to $57k.

"free" = at no additional costs to the taxes you already presumed to be paying
---
If OP just wanted to fill in forms on a PDF manually - there are dozens of products, including tediously creating a text box in Open Office for each line and item. In fact, the IRS already makes the PDF forms fillable: http://www.irs.gov/pub/irs-pdf/f1040.pdf
  Actually doing the calculations is where the liability and problems come in.

In my limited experience, making a calculation error or omission on a return set off a chain of events;
first, they re-calculate your taxes and settle up on their terms; then you are a whole lot more likely to be audited for the next 3-4 years.

@sjhillman .. "freedom edition" +1 informative
@AC "FUD" -1 NOT
@Loughlia " ...can send you to jail" .. You do realize it is much more likely that you'll just get an interest-bearing permanent debt.
            The IRS and Student Loan providers will work backwards from your Social Security death benefit of $300-ish if they have to. Only in rare cases, where the headlines serve a purpose more than the recovery of the money, - or if there is malice or fraud, does someone actually get jailed on taxes.

and .. the IRS will help with your taxes, also for free.
    http://www.irs.gov/newsroom/article/0,,id=202121,00.html .. and the IRS offers links to other "free" filing services, this one works for income up to $57k.

"free" = at no additional costs to the taxes you already presumed to be paying
---
If OP just wanted to fill in forms on a PDF manually - there are dozens of products, including tediously creating a text box in Open Office for each line and item. In fact, the IRS already makes the PDF forms fillable: http://www.irs.gov/pub/irs-pdf/f1040.pdf
  Actually doing the calculations is where the liability and problems come in.

In my limited experience, making a calculation error or omission on a return set off a chain of events;
first, they re-calculate your taxes and settle up on their terms; then you are a whole lot more likely to be audited for the next 3-4 years.

Tax exempt status isn't limited to Christian churches. Maybe you should learn more about this.

The 20 year TV went away with the introduction of the inventory tax. Parts are not kept to support the service industry any more.

http://www.irs.gov/businesses/small/industries/article/0,,id=100355,00.html

This tax ensures slow moving inventory is disposed of as it is not profitable to have replacement parts in stock for 10 year old TV sets. You can get generic caps, CFL lamps, etc, but a replacement custom video decoder/driver chip will be unobtainable. A broken VCR idler arm unless generic to fit many brands are unavailable. This is when I changed careers. Parts for older stuff no longer exists.

Careful. Make sure she files her US tax returns. Her first ~$80k (USD) will be US tax exempt, but she is expected to still file. Failing to do so could cause all kinds of trouble.

http://www.irs.gov/newsroom/article/0,,id=250788,00.html

No, income below a certain annual amount isn't taxable. And sales tax is totally unrelated.

http://www.irs.gov/publications/p501/ar02.html

That may have been the case at one point, but based on my own work that's no longer true. Your acquiring bank assigns your business an MCC (merchant category code) when you first get your account, and that's sent back to Visa/Mastercard when authorizing a transaction. Moreover, that's not even something you send; it's just part of how your account is configured when your acquiring bank sends the transaction over the network.

http://www.irs.gov/irb/2004-31_IRB/ar17.html

http://web.archive.org/web/20070710202209/http://usa.visa.com/download/corporate/resources/mcc_booklet.pdf

Depending on your merchant processor and acquiring bank that may be customizable (though I have never seen it done, and I've worked with quite a few processors), but for the vast majority of merchants, it's simply a very generic four-digit code that's associated with the full dollar amount of the authorization. All I need to authorize a card payment is the amount, account number, and expiration date - CVN, billing address, and even consumer name are optional, although your pricing will be downgraded (i.e., more expensive) if you omit those fields due to the higher risk.

Not sure how Australian talks on copyright led to American conspiracy theories about the IRS, but it sounds like you need The Truth About Frivolous Tax Arguments (updated for 2012!), chock full of legal citations and evidence that won't convince you because you've already made up your mind.

Also, a fair system is not necessarily linear with wealth and income. It is not unacceptable for the very rich to pay a proportionally unfair amount of taxes.

There is no number which suggests this, feel free to check the data yourself http://www.irs.gov/taxstats/indtaxstats/article/0,,id=98123,00.html

On effective rates bottom 50% pay 1.85% from all sources (income taxes, capital gains, payroll) while the top 1% pag 24.01%.

On share of taxes the bottom 50% pay 2.3% of the burden (on an income share of 13.5%) while the top 1% pay 36.7% of the burden (on an income share of 16.9%).

On dollar amounts the bottom 50% contribute $19.5b while the top 1% contribute $318b.

How are they paying proportionally unfairly from any number?

After all, above a certain wealth having more money is less useful than a similar amount spread among people that will spend it.

This is false, trickle up is as economically unsound as trickle town. Unless they keep the additional wealth as cash then its invested somewhere, this extra capital is what provides liquidity for corporate and consumer credit. Suggesting it is "wasted" or not as productive is pure ignorance.

No. The final price is what you pay for the item. The receipt should spell out how much goes to the government. And tax rates are pretty clearly spelled out and public information, not hidden. Friendly warning, you're heading to nutter territory. A receipt without the price, tax, and total would be an issue between you and the store, and the "hidden government tax" you fear is more likely the store putting a tent pole in its profits.

Also, if you read more and typed less, you might figure out there are a few ways to adjust your withholding so that it comes out as close to even as possible. Most people seem to want that check, since they are unable to save money and allow the government to do it for them. The government might make a little extra money on the float, but the IRS, and Congress generally, wants it to come out as close to even as possible.

It's called a W-4, and the IRS instructions, and position, are pretty clearly spelled out here.
http://www.irs.gov/publications/p919/index.html

My idea would be to raise taxes on the wealthy and quickly pay off the debt.

You must have a very different definition of the word "quick" than I and most other people do.

You could tax all those making over $500K/yr at 100% and it still leaves a deficit of around $800bn-$850bn using these numbers:

http://www.irs.gov/pub/irs-soi/histab3.xls

That means the US would *still* be borrowing money and adding to the national debt.

There's simply no way to escape the fact that it's impossible to balance the US budget and stabilize or reduce the national debt by taxation. Reducing the amount of money government takes out of the system and simplifying and reducing government regulation & bureaucratic red tape, so that the economy can grow and produce enough wealth, in order for low and reasonable taxes along with reasonable regulation that does not stifle the generation of wealth to produce sufficient revenues to eventually eliminate the yearly deficit and start reducing the national debt, is the only way (other than a catastrophic collapse) the US can come out of this crisis.

Just look to Greece. We can either bite the bullet now, or wait until everything collapses and there is violence on the streets. Other countries won't "bail out" the US as they have with Greece.

Strat

Not in this scenario.

http://www.irs.gov/publications/p523/ar02.html#en_US_2010_publink1000200711

Without getting into technical details, in the general case, and under 2011 tax law, a married couple can waive paying federal tax on up to $500k($250k exclusion each) of realized gains on your house. Even if the parents had 0 basis on the house, the maximum realized gain would be $500k, so they don't have to pay anything on that.

Further, the son will take that property with a basis at fair market value(step-up in basis, see link below), i.e he'll have a full $500k basis in that house. It could appreciate to $750mil and he'd still pay no taxes when selling it.

http://library.findlaw.com/1999/Jan/1/126098.html

IAACPA. (Albeit, a financial accountant, not a tax accountant:P)

But will the son not be given a bill by the IRS for estate tax when the house is transferred into his name when his parents die? This was what I was thinking would force him to sell the house in order to pay.

Not in this scenario.

http://www.irs.gov/publications/p523/ar02.html#en_US_2010_publink1000200711

Without getting into technical details, in the general case, and under 2011 tax law, a married couple can waive paying federal tax on up to $500k($250k exclusion each) of realized gains on your house. Even if the parents had 0 basis on the house, the maximum realized gain would be $500k, so they don't have to pay anything on that.

Further, the son will take that property with a basis at fair market value(step-up in basis, see link below), i.e he'll have a full $500k basis in that house. It could appreciate to $750mil and he'd still pay no taxes when selling it.

http://library.findlaw.com/1999/Jan/1/126098.html

IAACPA. (Albeit, a financial accountant, not a tax accountant:P)

Is someone paying tax on these transactions?

Lately Credits have become more intriguing. Warner Brothers this summer offered movie-goers a chance to watch Harry Potter and The Dark Knight for 30 Credits apiece. Miramax and Paramount countered with film-viewing offers, too

This sounds like a barter transaction:

http://www.irs.gov/businesses/small/article/0,,id=215975,00.html

Exchanges occurring through a barter exchange are reported to IRS on Form 1099-B and show the value of cash, property, services, credits or scrip added to your account by the barter exchange.