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Sometimes a bonus can put you in a higher tax bracket. We have a graduated income tax from 0 to 35 depending on the taxable income level you reach. It is not a "flat tax".
In 2007 for a single taxpayer, if your taxable income were between $31,850-$77100, anything over $31850 was taxed at 25% plus the $4386.25 base as computed below.
10% $ 7825 $ 782.50
15% $24025 $3,603.75
Total $31850 $4,386.25
Q: Would this taking more base pay be better than a bonus?
Considering a bonus versus a base pay would not change the taxes you would pay. The withholdings maybe different. The amount the tax you owe would not create a difference, because the amount just shows as a W-2 at year end.
Q: Eligibility for tax stimulus if haven't filed:
There is no extension The last date to file for the stimulus payment was Oct 15,2008 for you to claim this for 2007 tax year. I understand that when you file your 2008 return, you can claim the payment, but only as a credit against tax. I guess if there is an overpayment you will get back with your 2008 tax return.
Q: Deductibility of option to purchase?
Leasing a house you live in with an option to buy, is a personal expense, not deductible. If you leased a property to rent (to others) with an option to buy and allowed the option to expire, you could have a deductible loss.
Q: I help 25% share in an S-Corp in 2003 and 2004 (filing K1s) when it changed name and EIN but continued business as usual (same owner, staff, office, business, etc.). I was not issued shares in the successor company at the time (so I have not filed K1s for 2005,6,7) Now the company is about to be sold and the owner wants me to have 25% of the sale proceeds. How can I claim this as a capital gain as per the IRS, since I only have a stock certificate in the predecessor company? What do the owner and I need to do to make this stick?
A: Answer: I know you would like it to be a long term gain, taxed at a lower rate, but. . . You could always have the LLC file amended tax returns, showing that you were responsible for 25% of the income, pay taxes, penalites and interest, have the potential for audits, and probably cost more than you could save. - Richard Fritzler http://www.owelesstax.com http://www.nevadacorporateservices.com phone 800 590-6612 2
Q: We sold our mobile home this year. There was a catch, we had to buy a new home from the builder(not mobile). More than half of the money went to pay off the bank. Will we have to pay taxes on this income or does it work the same way as selling and buying a home within a 5 year period, to not have to claim the income? - A: mobile home would be treated the same as a site built home if you owned and lived in it for 2 years preceding the date of sale and have not excluded gain on another main home within 2 years, you can exclude $250,000 gain ($500,000 if married filing jointly).
In an LLC, salary paid to a partner is considered a guaranteed payment which is excluded from income and payroll tax withholding, but is subject to self employment tax. You would record those salaries the same as guaranteed payments.
Q: I am looking for advise on what is the best entity to establish for tax purposes.
A: Partnerships of all kinds, LLC's, S-corps, are all taxed at the individual tax rates, which means no tax advantage.
Real Corporations pay their own taxes at much more favorable rates. SOoooo, if you are looking for a tax advantage, then do your business as all of the most successful businesses do.
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