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Old 02-21-2008, 04:22 PM
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How is my pass-through income from my S Corporation taxed on my personal tax return?

I would like to know how "my pass-through income" that is reported on my K-1 from my S Corporation taxed on my personal tax return? Do I have to pay Self-Employment taxes on this income?

Your answer highly appreciated!

Thanks..



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Old 03-04-2008, 11:36 AM
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How is my pass-through income from my S Corporation taxed on my personal tax return?

Generally speaking, S-Corporations have the benefit of having "Pass-Through" income or losses, (along with any credits and other special deductions) flow directly to the personal tax return without being subject to Self-Employment Taxes.

The K-1 that you will receive from the S-Corporation will have all the special items included with a specific code and a line number. Usually, your CPA will know what to do with these items, some the items are important as they have an impact on your tax return. I would let him or her sort out where and what to do with these items.

What you should be planning ahead of time, is whether or not the S-corporation has a material profit and impacts your tax liabililty substantially. If it does, than you should have your CPA perform year-end tax planning to ensure that you pay the proper tax liability in a timely manner, to avoid a larger tax liablity on April 15, 2008 and avoid any possible underpayment penalties and interest.

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