DID YA HEAR? 80% of the over 250K crowd is "Small Business"!

[Valerie]

But as an owner, you can choose to take a dividend payment above and beyond your salary that is taxed differently than income and is not subject to all those payroll taxes. Dividend payments are reported on a 1099 not a w-2.z

Another option for some businesses, if it applies, is that your business can pay you rent. And rental income is taxed differently than earned income. You can also establish a separate management company to collect that rent and take care of the property and have an entirely separate income from that which allows you to double up on tax deferred retirement accounts and gives you another source of dividend income rather than income reported on a w2

So potentially, you could draw a 50K salary reported on a w2, dividends of 50K and rental income of 50K and pay less taxes than you would on 150k reported on a w2.

hmmmm....dividend income isn't all that different...you still must pay income taxes on it. The only thing different, that I can see, is you can deduct the 50% of FICA taxes. Which you wouldn't be obligated to pay anyway, if your business was paying it.

I'm also not seeing how rental income is taxed differently.

Yes, Income is income.

W-2 income is earned income that has already had taxes deducted from it and that number is reported right on the 1040 tax form. Then there's 1099 income--1099 - MISC is income you have earned but have not paid taxes on yet. 1099 - INT is interest income, 1099 - DIV is dividend income, 1099 - B for brokerage transaction income, 1099 - S for proceeds in a real estate transaction, 1099 - SSA for social security, etc...there are a bunch for every type of income that is not W-2. You receive these statements from your bank or whatever it is after January 30th and then use these numbers to file your tax forms.

The question becomes how is this income treated to determine how much of it is taxable on your 1040. There's a separate form (schedule) to account for every type of income and then that number from each schedule goes onto the 1040 form and is added as taxable income.

In Schedule A you itemize all your personal deductions, Schedule B you account for interest income and dividend income, Schedule C is for income from small business, schedule D for capital gains income (stocks, real estate), schedule E real estate rental income, trusts, partnerships, S-corps, Schedule F farm income.......and a bunch of other ones I've never had the pleasure of having to deal with.

So income is income and it all gets taxed, but along the way there are formulas for different types of deductions and costs depending.

And then the 1040 just says something like:

Add the amounts in the far right column for lines 7 through 21. This is your total income____________

And you're right, it all gets taxed the same.




Can you tell I'm in tax mode?

 

[garyd]

And because their are no more rich to pay them their middle class wages the Middle class will become poor and the ranks of the poor will expand.

Auditor it never hurst the rich but it certainly does a number on those people who provide various services to the rich and near rich.

 

[oreo]

DID YA HEAR? 80% of the over 250K crowd is "Small Business"!

Yeah? So what is your point?

Define "SMALL business" for us, otherwise the point of your post is meaningless.

I get sick of how easily some of you people are mislead by the word games that are played on you.

Bath Iron works is, according to the definition of the US government a SMALL BUSINESS.

They make our freaking battle cruisers for crimminies sakes.


So when most us say "small business", we think we mean the mom and pop single owner type businesses.

But when the goverment defines "small business", their definitions of small are wildly different that what the average person thinks it means, and their definitions are entirely industry dependent

This confusion when that word is bantered in politics about is NOT an accident.

It is a contrived lie done by semantics

Definition of small business (typically Sub-S corporations)

Your auto mechanic, your dentist, your trash collector, your doctor, your service employees, your construction industry from A to Z.

Look around your communities. If you see any small business that has 4 to 40 full time employees--the owners of that business are probably in the 250K "evil" rich catagory.

 

[oreo]

But as an owner, you can choose to take a dividend payment above and beyond your salary that is taxed differently than income and is not subject to all those payroll taxes. Dividend payments are reported on a 1099 not a w-2.z

Another option for some businesses, if it applies, is that your business can pay you rent. And rental income is taxed differently than earned income. You can also establish a separate management company to collect that rent and take care of the property and have an entirely separate income from that which allows you to double up on tax deferred retirement accounts and gives you another source of dividend income rather than income reported on a w2

So potentially, you could draw a 50K salary reported on a w2, dividends of 50K and rental income of 50K and pay less taxes than you would on 150k reported on a w2.

hmmmm....dividend income isn't all that different...you still must pay income taxes on it. The only thing different, that I can see, is you can deduct the 50% of FICA taxes. Which you wouldn't be obligated to pay anyway, if your business was paying it.

I'm also not seeing how rental income is taxed differently.

Yes, Income is income.

W-2 income is earned income that has already had taxes deducted from it and that number is reported right on the 1040 tax form. Then there's 1099 income--1099 - MISC is income you have earned but have not paid taxes on yet. 1099 - INT is interest income, 1099 - DIV is dividend income, 1099 - B for brokerage transaction income, 1099 - S for proceeds in a real estate transaction, 1099 - SSA for social security, etc...there are a bunch for every type of income that is not W-2. You receive these statements from your bank or whatever it is after January 30th and then use these numbers to file your tax forms.

The question becomes how is this income treated to determine how much of it is taxable on your 1040. There's a separate form (schedule) to account for every type of income and then that number from each schedule goes onto the 1040 form and is added as taxable income.

In Schedule A you itemize all your personal deductions, Schedule B you account for interest income and dividend income, Schedule C is for income from small business, schedule D for capital gains income (stocks, real estate), schedule E real estate rental income, trusts, partnerships, S-corps, Schedule F farm income.......and a bunch of other ones I've never had the pleasure of having to deal with.

So income is income and it all gets taxed, but along the way there are formulas for different types of deductions and costs depending.

And then the 1040 just says something like:

Add the amounts in the far right column for lines 7 through 21. This is your total income____________

And you're right, it all gets taxed the same.




Can you tell I'm in tax mode?

It's not 1099 income--it is referred to as K-1 dividend income. 1099 income is miscellaeous income--typically given out to contractors--not full time employees of the business.

Dividend income or K-1 income henceforth is exempt from FICA taxes--"not" federal income taxes or other state & local taxes. It's taxed in the same manner as dividends one would receive from stock ownership.

 

[oreo]

I am an S-Corporation with 4 full time employees. We do have to file two separate returns. You file one for the S-corporation & bottom line (profit) goes to the owners' 1040 income tax return. All profit or loss of the S-corporation flows through to the owners 1040 personal income tax filing.

K-1 income is dividend income--which is exempt from FICA taxes. The profit of the company--after the owners salary--is K-1 or dividend income. Therefore, this dividend income is taxed in the same manner as many American retirees or others, who receive dividends from stocks they own.

 

[auditor0007]

President Obama will make the wealthy pay their share of Income Tax. Thank God someone with brains is running your country for a change. Eight years of lies, deceit, theft, war, corruption, and hate will be replaced with PEACE, LOVE, and PROSPERITY.

God Bless Obama !

What a dunce. There may well be plenty of reasons to badmouth Republicans for the past eight years, but the Dems bringing us PEACE, LOVE, and PROSPERITY?????? Who the hell are you kidding? They're starting off by putting us further in debt, not by billions, but by trillions of dollars.

 

[SpidermanTuba]

"It appears that Obama forgot to mention that 80% of the over 250K people are honest hard-working small business owners. "

I sincerely hope you have the mathematical ability to understand how the above statement doesn't change the fact that most small businesses earn less than 250k.


and I don't really see how it matters whether someone earning 250k gets it from a small business or gets it from working for someone else - they should be taxed the same either way

 

[auditor0007]

Willow,

The middle- class will expand because those high earners will be atxed to the extent that they will be middle-class.

Well, we don't have to guess anymore. It's a proven; you are a socialist, if not a communist. Yippee, so we won't have any rich people anymore, and everyone will be happy. Of course, since it will be impossible to become rich, why bother trying?

 

[auditor0007]

Willow,

The middle- class will expand because those high earners will be atxed to the extent that they will be middle-class.

so, ya gotta pull those above down, you cant lift those below up?

Everyone will work for the greater good. Peace be with you my son.

 

[SpidermanTuba]

Of course, since it will be impossible to become rich, why bother trying?

Why bother trying either way?

 

[DiveCon]

"It appears that Obama forgot to mention that 80% of the over 250K people are honest hard-working small business owners. "

I sincerely hope you have the mathematical ability to understand how the above statement doesn't change the fact that most small businesses earn less than 250k.


and I don't really see how it matters whether someone earning 250k gets it from a small business or gets it from working for someone else - they should be taxed the same either way

wow, thats quite ironic
werent you the guy comparing credits and debits as if they were the same thing earlier?
who are YOU to complain about ANYONES math skills

 

[SpidermanTuba]

wow, thats quite ironic
werent you the guy comparing credits and debits as if they were the same thing earlier?

Actually, no, I wasn't. So its not ironic. Certainly not "quite ironic".

 

[DiveCon]

wow, thats quite ironic
werent you the guy comparing credits and debits as if they were the same thing earlier?

Actually, no, I wasn't. So its not ironic. Certainly not "quite ironic".

my apologies then

 

[SpidermanTuba]

wow, thats quite ironic
werent you the guy comparing credits and debits as if they were the same thing earlier?

Actually, no, I wasn't. So its not ironic. Certainly not "quite ironic".

my apologies then

not accepted

 

[DiveCon]

Actually, no, I wasn't. So its not ironic. Certainly not "quite ironic".

my apologies then

not accepted

fuck off then
asshole

 

[SpidermanTuba]

my apologies then

not accepted

fuck off then
asshole

alright, accepted then.



just kidding

 

[Skull Pilot]

President Obama will make the wealthy pay their share of Income Tax. Thank God someone with brains is running your country for a change. Eight years of lies, deceit, theft, war, corruption, and hate will be replaced with PEACE, LOVE, and PROSPERITY.

God Bless Obama !

I am so sick of this "fair share" bull shit.

1999 the top 5% paid 55.45% of all income taxes and the bottom 95% paid 44.55%
2000 the top 5% paid 56.47% of all income taxes and the bottom 95% paid 43.53%
2001 the top 5% paid 53.25% of all income taxes and the bottom 95% paid 46.75%
2002 the top 5% paid 53.80% of all income taxes and the bottom 95% paid 46.20%
2003 the top 5% paid 54.36% of all income taxes and the bottom 95% paid 45.64%
2004 the top 5% paid 57.13% of all income taxes and the bottom 95% paid 42.87%
2005 the top 5% paid 59.67% of all income taxes and the bottom 95% paid 40.33%
2006 the top 5% paid 60.14% of all income taxes and the bottom 95% paid 39.86%

Seems to me the top 5% are paying more than their fair share.

Who Pays Income Taxes? See Who Pays What

 

[Skull Pilot]

But as an owner, you can choose to take a dividend payment above and beyond your salary that is taxed differently than income and is not subject to all those payroll taxes. Dividend payments are reported on a 1099 not a w-2.z

Another option for some businesses, if it applies, is that your business can pay you rent. And rental income is taxed differently than earned income. You can also establish a separate management company to collect that rent and take care of the property and have an entirely separate income from that which allows you to double up on tax deferred retirement accounts and gives you another source of dividend income rather than income reported on a w2

So potentially, you could draw a 50K salary reported on a w2, dividends of 50K and rental income of 50K and pay less taxes than you would on 150k reported on a w2.

hmmmm....dividend income isn't all that different...you still must pay income taxes on it. The only thing different, that I can see, is you can deduct the 50% of FICA taxes. Which you wouldn't be obligated to pay anyway, if your business was paying it.

I'm also not seeing how rental income is taxed differently.

I didn't say you don't pay taxes on dividend income. i said you pay less taxes as a business owner. The 50% of the SS you say your employer would pay in my case would be paid by me since I own the company. If I don't have to pay that I am better off.

Rental income is subject to some different rules and depreciation can often turn rental income into a loss.

 

[Skull Pilot]

"It appears that Obama forgot to mention that 80% of the over 250K people are honest hard-working small business owners. "

I sincerely hope you have the mathematical ability to understand how the above statement doesn't change the fact that most small businesses earn less than 250k.


and I don't really see how it matters whether someone earning 250k gets it from a small business or gets it from working for someone else - they should be taxed the same either way

Small business owners will find ways to keep their income under 250K. There are plenty of ways to use your business to pay for your personal expenses. That means even if you're keeping your income down, you're still getting paid and the business gets additional deductions.

 

[Ravi]

Your auto mechanic, your dentist, your trash collector, your doctor, your service employees, your construction industry from A to Z.

Look around your communities. If you see any small business that has 4 to 40 full time employees--the owners of that business are probably in the 250K "evil" rich catagory.

As usual, you are incorrect.

Median Salary by Job - People with Doctor of Medicine (MD) Degrees (United States)

What is the Salary of a Doctor, Medical Doctor Salary – PayScale

The income of the majority of small business owners is less than $250,000 no matter how hard you kick your heals and cry.