The tax laws are complex and inaccuracies arrise when we generalize.
Companies can deduct any "operating expense".
This is certainly not the case as any qualified tax profesional will tell you. Business are generally allowed a deduction for "ordinary and necessary" expenses incurred in the pursuit of earning a profit. Not just any "operating expense" will do.
People cannot (the most obvious ones being food, shelter and transport.
Again, you have to be careful with these sweeping statements. In Massachusetts you can deduct two of the three!
Yes! That is precisely correct. I have seen that confusion more than once here. It's more than semantics. The two are very different, legally speaking.
To clarify for the/dot community... For the purposes of income tax in the United States, corporations are people. They are more then just comprised of people; they are considered to be "person". Congress wrote it into the Internal Revenue Code that the definition of "person" included corporations. It also includes Partnerships, Trusts, Estates and a host of other entity types. See IRS Sec. 7701(a)(1).
You're no alone in your opinion! The right thing to do is the right thing to do, if everyone does the right thing to do. If not, the right thing to do is not the right thing to do, and I will not do the wrong thing to do.
Exactly why it could never work as designed by using a billing address! A common example in this debate is a person who buys a product online as a gift in a state which does not have nexus with the retailer. He or she then has it shipped to a state which does have nexus. The sales tax applies in this case because of the sales tax and use tax unification.
The statement "Your company makes money, it's taxed. They pay you, it's taxed again" isn't exactly correct. Generally, for federal income tax purposes companies are only taxes once on this money in the form of a payroll tax. They are allowed a deduction against gross income the amount they pay in payroll and thus escape income taxation on payroll expenses pursuant to 26 USC 62(a)(1). Of course shareholder distributions, dividends and loans to employees do not receive the deduction.
Since most of the patentable tax strategies have to do with federal income tax I'll keep my comment exclusively to that tax. In 2010 a single taxpayer filing a federal Form 1040 who made $12,000 from wages would owe $266 in taxes. He or she would be entitled to a refundable making work pay tax credit of $400. The tax payer would receive a net payment from the federal government of $134. They would have a federal income tax rate of -1.12%
Let us not forget that the Internal Revenue Code section 7701(a)(1) defines âoepersonâ to include an individual, trust, estate, partnership, or corporation.
from page 3, paragraph 1:
"In fact, a company may save money by hiring international students because the majority of them are exempt from Social Security (FICA) and Medicare tax requirements."
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This is certainly not the case as any qualified tax profesional will tell you. Business are generally allowed a deduction for "ordinary and necessary" expenses incurred in the pursuit of earning a profit. Not just any "operating expense" will do.
Again, you have to be careful with these sweeping statements. In Massachusetts you can deduct two of the three!
Yes! That is precisely correct. I have seen that confusion more than once here. It's more than semantics. The two are very different, legally speaking.
Ah, but it doesn't make it illegal. I think you are confusing tax avoidance with tax evasion.
1099C http://www.irs.gov/pub/irs-pdf/f1099c.pdf
"...companies simply make sure they pay out all the money they make as wages, and presto: no tax liability because they made no profit."
No income tax liability! You trade the income tax for the payroll tax.
To clarify for the /dot community... For the purposes of income tax in the United States, corporations are people. They are more then just comprised of people; they are considered to be "person". Congress wrote it into the Internal Revenue Code that the definition of "person" included corporations. It also includes Partnerships, Trusts, Estates and a host of other entity types. See IRS Sec. 7701(a)(1).
You're no alone in your opinion! The right thing to do is the right thing to do, if everyone does the right thing to do. If not, the right thing to do is not the right thing to do, and I will not do the wrong thing to do.
Exactly why it could never work as designed by using a billing address! A common example in this debate is a person who buys a product online as a gift in a state which does not have nexus with the retailer. He or she then has it shipped to a state which does have nexus. The sales tax applies in this case because of the sales tax and use tax unification.
The statement "Your company makes money, it's taxed. They pay you, it's taxed again" isn't exactly correct. Generally, for federal income tax purposes companies are only taxes once on this money in the form of a payroll tax. They are allowed a deduction against gross income the amount they pay in payroll and thus escape income taxation on payroll expenses pursuant to 26 USC 62(a)(1). Of course shareholder distributions, dividends and loans to employees do not receive the deduction.
Since most of the patentable tax strategies have to do with federal income tax I'll keep my comment exclusively to that tax. In 2010 a single taxpayer filing a federal Form 1040 who made $12,000 from wages would owe $266 in taxes. He or she would be entitled to a refundable making work pay tax credit of $400. The tax payer would receive a net payment from the federal government of $134. They would have a federal income tax rate of -1.12%
Let us not forget that the Internal Revenue Code section 7701(a)(1) defines âoepersonâ to include an individual, trust, estate, partnership, or corporation.
hahaha. clever.
Do you think this incredibly inaccurate opinion belongs on Slashdot?
from page 3, paragraph 1: "In fact, a company may save money by hiring international students because the majority of them are exempt from Social Security (FICA) and Medicare tax requirements."