Question
Why would a small business file an individual tax return?
The premise of my question is based on some politicians' suggestion that all business owners will file tax returns as individuals, thereby losing all their rightful deductions in order to not be taxed as a business because the exemption for tax increases is income under $250K?
1 month ago - 1 answers
Best Answer
Chosen by Asker
Sole Prioprietors *already* file a 1040 with a schedules C and SE. It's easy to see what they made from the business. Partnerships also have their income flow through to the 1040, using schedules E and SE. S-corporations are tricky. They pay themselves a salary, but if there is money over and above the salary, it flows to a different line of the tax return. The IRS can see what the person made from the business. Small C Corporations are the one that would mask the income. They pay the themselves a salary, the corporation pays its own tax and if there is money left over *may* pay dividends. *This* might be what they were suggesting shouldn't be allowed.
by the tax lady
1 month ago
Asker's Rating: 