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When Should You Kick Your Kids Out of the House?
Yes, you will miss the kids when they move out, but you will adjust to your new freedom. And odds are they will come back often, seeking your advice and for companionship.
However, you must insist the kids move out at a certain point or you will harm them, perhaps irreparably. They can’t truly grow up until they are on their own.
You bounce better when you are young. Struggle is a natural part of growing up, moving out and finding your way in the world. There will be scars. That is the natural order of things.
It hurts. Life hurts! You fought through the difficulties when you were young. It is how you got where you are. A bird never learns to fly sitting around in the nest.
It Might be Time to Give up on the S Corporation
Numerous benefits available tax-free to employees do not apply to 2% shareholders of an S corporation. With the C corporation tax rate at a low 21% and dividends likely qualified (taxed on the personal return at the long-term capital gains (LTCG) rate), double taxes may no longer be the issue it once was.
For some individuals, the LTCG tax rate can be 0%. This stops double taxation of dividends in its tracks. Even if dividends are taxed it is at the lower LTCG rate rather than at ordinary income rates. The top LTCG rate is currently 20%, however, there is a small (on percentage terms) additional tax on higher incomes that could push the effective LTCG rate to 23.9%.
But the benefits are the real prize. How many fringe benefits you give the owners will determine if the C corporation is better for you. Some of these benefits are massive, allowing for 5-figure deductions. Something you can’t do with an S corporation.