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  #1 (permalink)  
Old 09-22-2017, 09:50 AM
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Collecting Unemployment and starting a C Corp

Hello tax gurus,

I recently got laid off from my job of 22 years and am collecting unemployment benefits. I just started my online business and was wondering how I can still collect my unemployment, which I need to live and pay my bills without having to report my business earnings as personal income.

I am thinking about setting up a C Corp in Texas where I live. If I set my business up as a C Corp and it is taxed separately from my personal income, do I have to report that as income to my unemployment(TWC) if I do not pay myself a dividend or paycheck?

I would not be able to pay myself for a little while as all company earnings will need to be used to grow my business and pay taxes. Once I can pay myself then I would not be on unemployment anymore of course. I am currently looking for full-time work(applying, sending resumes) and will take a job if offered that meets my pay requirements. I am following all of the terms of my unemployment but if I have to report my business earnings as income then it will kill my unemployment benefits and if I use my business earnings to pay my bills and live then it will kill my business.

There has to be a way to start a business without killing unemployment! Everyone knows that you cannot pay yourself right away when you start a business except the TCW(Texas Workforce Commission) it seems.

Is a C Corp a way around this? Please help!



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Old 09-23-2017, 02:36 AM
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I am thinking about setting up a C Corp in Texas where I live. If I set my business up as a C Corp and it is taxed separately from my personal income, do I have to report that as income to my unemployment(TWC) if I do not pay myself a dividend or paycheck?==========>it depends; in general, you need to report your C corp income whether or not you pay yourself div/paycheck UNLESS your C corp has taxable profit; The corp must file a corporate tax return, IRS Form 1120, and pay taxes at a corporate income tax rate on any profits. If you work for the corp, you need to pay individual income tax on your salaries and bonuses like a regular employee of any company. Salaries and bonuses are deductible business expenses, so the corp does not pay taxes on them.



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Old 09-23-2017, 08:21 AM
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Thank you Wnhough for your reply. I already know that I have to file an 1120 for my C Corp.

What I need to know is, do I have to report that as personal income to my unemployment(TWC) if I do not pay myself a dividend or paycheck from the C Corp? I would not be filing anything on my 1040 from the C Corp. I would not have personal income if I don't pay myself anything while I'm on unemployment.

If I have to report what my C Corp made to unemployment then I would lose my unemployment and I would then have to use my C Corp earnings to pay my personal bills and to live which would kill my business.



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Old 09-23-2017, 09:22 PM
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Quote:
Originally Posted by TriggerMinor View Post
What I need to know is, do I have to report that as personal income to my unemployment(TWC) if I do not pay myself a dividend or paycheck from the C Corp? I would not be filing anything on my 1040 from the C Corp. I would not have personal income if I don't pay myself anything while I'm on unemployment.

.
yes as said
you need to report your C corp income whether or not you pay yourself div/paycheck UNLESS your C corp has taxable profit



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Old 09-23-2017, 10:41 PM
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Thank you for your reply again but I am not understanding what you are saying. I'm not asking if I have to report my C Corp income on form 1120. I'm asking if I have to report my corp earnings that I file on form 1120 to my unemployment which is reported on 1040? It's not personal earnings.

If I don't pay myself a paycheck from my corp then I do not have to file anything from my corp on my 1040 so therefore I should not have to report anything to my unemployment, correct?

What exactly do you mean, "you need to report your C corp income whether or not you pay yourself div/paycheck UNLESS your C corp has taxable profit?"



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Old 09-25-2017, 08:17 PM
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Originally Posted by TriggerMinor View Post
Thank you for your reply again but I am not understanding what you are saying. I'm not asking if I have to report my C Corp income on form 1120. I'm asking if I have to report my corp earnings that I file on form 1120 to my unemployment which is reported on 1040? It's not personal earnings.

If I don't pay myself a paycheck from my corp then I do not have to file anything from my corp on my 1040 so therefore I should not have to report anything to my unemployment, correct?

What exactly do you mean, "you need to report your C corp income whether or not you pay yourself div/paycheck UNLESS your C corp has taxable profit?"
Sorry it is my bad. What i mean is that Unless your C corp has losses,i.e. net operating losses so on, as said you still needto report your C corp income on your 1040 whether or not you pay salary/dividend to yourself .
,



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Old 09-25-2017, 08:59 PM
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Thank your for your reply Wnhough!

I contacted a tax CPA and attorney and was told that I do not need to report my C Corp earnings on my 1040 as you stated because it is taxed as it's own entity on form 1120. It is not a pass through entity like an LLC or an S Corp which are pass through companies.

On a pass through company, all company earnings and losses are passed through to the members of the company and reported on the members own 1040. That is only for an LLC(unless I file form 8832 to change my LLC filings to a C Corp filing) and S Corp, not a C Corp.

If I were to receive a salary, paycheck, dividend or bonus from the C Corp, then that would be personal earnings that I would have to report on my 1040.

I got on this site to see if someone(tax guru) could tell me if I had to report my C Corp earnings to my unemployment as personal income if I did not pay myself a paycheck from the C Corp and you still have not answered that question. What you did give me is false information. So, I do not trust this site with any information given.

Please, you do not have to reply to this anymore as I am going to contact an unemployment attorney to get the real answer that I need because I cannot trust this site with real information given.

Not happy with AskTaxGuru!



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Old 11-07-2017, 09:58 PM
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Old 11-08-2017, 02:52 AM
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Quote:
Originally Posted by TriggerMinor View Post
Thank your for your reply Wnhough!

I contacted a tax CPA and attorney and was told that I do not need to report my C Corp earnings on my 1040 as you stated because it is taxed as it's own entity on form 1120. It is not a pass through entity like an LLC or an S Corp which are pass through companies.

On a pass through company, all company earnings and losses are passed through to the members of the company and reported on the members own 1040. That is only for an LLC(unless I file form 8832 to change my LLC filings to a C Corp filing) and S Corp, not a C Corp.

If I were to receive a salary, paycheck, dividend or bonus from the C Corp, then that would be personal earnings that I would have to report on my 1040.

I got on this site to see if someone(tax guru) could tell me if I had to report my C Corp earnings to my unemployment as personal income if I did not pay myself a paycheck from the C Corp and you still have not answered that question. What you did give me is false information. So, I do not trust this site with any information given.

Please, you do not have to reply to this anymore as I am going to contact an unemployment attorney to get the real answer that I need because I cannot trust this site with real information given.

Not happy with AskTaxGuru!
I contacted a tax CPA and attorney and was told that I do not need to report my C Corp earnings on my 1040 as you stated because it is taxed as it's own entity on form 1120. It is not a pass through entity like an LLC or an S Corp which are pass through companies.========>>absolutely true and it is common sense

On a pass through company, all company earnings and losses are passed through to the members of the company and reported on the members own 1040. That is only for an LLC(unless I file form 8832 to change my LLC filings to a C Corp filing) and S Corp, not a C Corp.=====>You are exactly correct as mentioned previously.

If I were to receive a salary, paycheck, dividend or bonus from the C Corp, then that would be personal earnings that I would have to report on my 1040.=====>This is also absolutely correct;as said you need to report salary, paycheck, dividend or bonus from the C Corp on your 1040. This is common sense ,however, the Cc orp, before paying you salary or div so on, must pays tax to IRS;as you said, An S corp is a pass-through tax entity, while a reg sub C corp is a completely separate taxpayer from its owners. For example, income of a regular corp may be "taxed twice." The income can be taxed on the corp's own tax return and once again on the shareholder's individual return.what I meanis THAT the c corp Must pay tax on its income. ingeneral, double taxation often occurs because corps, I mean C Corps,as you know , are considered separate legal entities from their shareholders. As such, corps pay taxes on their annual earnings, just like individuals. When corps pay out dividends to shareholders, those dividend payments incur income-tax liabilities for the shareholders who receive them, even though the earnings that provided the cash to pay the dividends were already taxed at the corp level.



I got on this site to see if someone(tax guru) could tell me if I had to report my C Corp earnings to my unemployment as personal income if I did not pay myself a paycheck from the C Corp and you still have not answered that question. What you did give me is false information. So, I do not trust this site with any information given.=>ASlognas you were misinformed then, it is my bad/fault no question ablout it. I guess some sort of poor communication cuses misunderstanding.if it is correct I really apologize.



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Old 11-08-2017, 03:01 AM
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[quote=TriggerMinor;34721]QUOTE]

note; just refer to this stmt;What is taxable on a dividend may depend on where the money comes from a corp or another source. Typically, money paid out by an S corp is known as a distribution, and it is not taxable. C corps pay out dividends, which are taxable to shareholders. A corp is the only business structure responsible for paying its own taxes on profits. For a C corp, dividends are taxed twice to both the corp and the shareholders. A C corp, also known as a regular corp, is a separate and distinct legal entity from its owners. As such, it is taxed as a separate entity on all income that cannot be deducted as business expenses. Profits earned by the corporation are taxed at the corp income tax rates. If there is enough profit left over to pay out dividends to shareholders, the distributions are taxed again to the individual stockholders at their regular tax rates. Smaller corps typically avoid being taxed on dividends, as profits can be paid to employees as tax-deductible salaries and bonuses



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