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Corporate Tax Rate
If corporate tax rates are lowered to 20%, is there a way to structure your private practice group so you pay less taxes? Not quite sure how it works, but you form a corporation and everyone pays a reasonable wage to themselves for self employed income and an additional portion is considered company profits which would only be subject to 20% tax rate? Anyone know anything about this or are some private practices already set up like this?
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20 Replies
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As the bill is written now, no. Doctors are specifically exempt from enjoying the lower rates. Surprisingly, lawyers and hedge fund managers are also exempt from enjoying the lower rates.
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It may benefit those who have pass-through income. It won’t be as low as corporate tax rate, but close enough. I believe the new plan sets pass-through income tax rate at 25%.
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Is it true though that most S-corps won’t be eligible for this
Heard this before but not sure if the final draft has it
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Sandeep you are right. Here is what I found on a website written 5 days ago.
“First, the income earned by professional services providers, such as doctors, lawyers, accountants and others wouldn’t qualify for the lower tax rate.
Other business owners could choose one of two options to take advantage of the new lower rate on some of their income:
[ul][*]Categorize 70 percent of income as salary (subject to their individual tax rates) and 30 percent as business income (taxed at the 25 percent rate)[*]Set a ratio of their salary income to business income based on their level of capital investment.” [/ul] Better to have a business degree and own a telerad company, and make lots of money buy paying employee radiologists low salaries. Make money off their hard labor and get taxed at a lower rate than them for being a business scumbag! Those national mega radiology corporations buying out private practices will be rewarded even more now
[ul] [/ul]-
can you post a link to the website? thanks.
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There are several, you can just google it. Here are a couple
[link=https://www.bloomberg.com/news/articles/2017-11-03/trump-tax-bill-gives-cuts-in-pass-through-rule-loophole-killers]https://www.bloomberg.com…-rule-loophole-killers[/link]
[link=http://www.latimes.com/business/la-fi-pass-through-taxes-20171103-story.html]http://www.latimes.com/bu…es-20171103-story.html[/link]-
Under both the current House and Senate bills, despite protest from several business groups, service industries such as medicine, law, and accounting are still the “Forbidden Fields,” exempted from the tax reductions. They are required to treat 100% of their income as salary and will continue to be taxed at up to 39.6% federal tax.
In addition, they can no longer deduct state and local taxes, home office expenses, tax preparation, and mortgage interest.
Entities that passively invest in such industries, however, inexplicably get to enjoy the reduced new pass-through tax rate of 25% under the House Bill or the Senate’s 17.4% pass-through rate reduction/exemption.
[link]https://www.businessesfortaxreform.org/take-action[/link]
[link=http://rsmus.com/what-we-do/services/tax/washington-national-tax/how-pass-through-tax-reform-proposals-differ-in-house-and-senate.html]http://rsmus.com/what-we-…-house-and-senate.html[/link]
[link=https://www.forbes.com/sites/greatspeculations/2017/11/20/section-475-traders-may-be-eligible-for-pass-through-tax-cuts/#2188767a1cc2]https://www.forbes.com/si…tax-cuts/#2188767a1cc2[/link]
[link=http://beta.latimes.com/opinion/op-ed/la-oe-kleinbard-tax-reform-20171113-story.html]http://beta.latimes.com/o…rm-20171113-story.html[/link]-
Absolutely shameful
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Did you really believe there would be anything in these bills that would help us?
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To any of you who voted GOP….enjoy.
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Kansas passed a very low tax on pass through entities a few years ago and it had a bad outcome. The purpose was to give tax breaks to companies that hire a significant number of people. Unfortunately, doctors, lawyers, accountants and others took advantage of this tax break and the result (caused by this poorly thought out tax break and other issues) was a huge tax revenue shortfall and no increase in jobs.The GOP must prevent this mistake from happening nationally.
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it is not that being a pass through entity has made much of a difference for small businesses in the service sector, but the current GOP tax proposals seeks to EXCLUDE these services from the large tax cuts bestowed on large corporations and non-service pass-through entities, including Wall Street vehicles that invest in these industries.
The large tax cuts on the corporations to the tune of $1.5 Trillion or, if you don’t count the gimmick of expiring tax cuts for individuals and small businesses, up to $2.5 Trillion, are going to sink the economy, regardless of whether the GOP is of a mindset to punish doctors and other service industries or not. -
What a surprise, tax breaks didnt produce more jobs. Taxs breaks are to line an individuals or companys pockets. This is not wrong, but just call it what it is.
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That is exactly what tax breaks are. The ones that are on the GOP’s minds are for large, multinational megacorporations and Wall Street, who are poised to take advantage on a scale never before seen. Being a pass-through entity has never been a huge financial benefit. This is just a demonstration of where the mindset of the GOP is vis a vis the medical and other service professions.
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Interesting…because when I read the links posted by denizen, this is what I found…(posted below) I’m a bit confused, this appears to me that we can indeed benefit. Am i missing something?
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In an unusual turn of events considering the earlier clamor against applying a reduced tax rate to personal services income the Senate Finance Committee included a last-minute change to its rules. As long as a taxpayer has total income under $500,000 on a joint return or $250,000 for single filers the traditional boundaries of the top one percent none of the Senates wage requirements and none of its rules blacklisting certain businesses will apply.
Thus, for example, a member of a professional firm or practice in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, or brokerage services as well as any other profession or service line can get the 17.4 percent deduction without limitation, as long as their total income does not exceed the $500,000/$250,000 limits. They are not required to have any employees or pay any amount of wages. At a tax rate of 35 percent, a deduction equal to 17.4 percent of $500,000 would produce a tax cut of over $30,000.
[b] [/b][i] [/i][u][/u][strike][/strike]
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I guess the stay under 250 is a miss…
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This plan will increase my taxes due to the loss of the state and local tax deductions… I will help fund the tax cuts for corporations and mega wealthy that are already doing great!
Thanks a**holes. -
Yes. Thanks a222holes
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Keep pulling that republican lever
They are for you!!!!!
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[b]xxxx wrong thread[/b]
