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Self-employment taxes on corporate income and how to avoid them

Source: marketwatch.com - Feb 1, 2017

Recent tax court decision in Fleischer v Commissioner sustained the IRS’s action in assessing self-employment taxes against the officer of an S corporation. Does that make any sense? It does when you look at the details. So let’s talk about how to avoid getting caught in this trap yourself.

When someone sets up a business entity, like an LLC, partnership, S corporation, or corporation, they get a tax identification number (TIN). The next step is to open a bank account for that entity, using the new TIN. Then, notify all the companies and people who pay the business for services or rents to issue the 1099-MISC form under the name and TIN of the business.

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Category: General Business