Tear out this quick guide for use during tax season, and look for our quick guide for individual taxpayers in the January 2020 issue.
C CORPORATION INCOME TAX
* Taxable income of a C corporation: Taxed at a flat rate of 21%.
QUALIFIED PERSONAL SERVICE CORPORATION TAX
* Taxable income of a qualified personal service corporation is no longer subject to tax at a flat rate of 35% but is taxed at the regular corporate tax rate of 21%.
ACCUMULATED EARNINGS TAX
* 20% of accumulated taxable income (in addition to regular corporate income tax).
PERSONAL HOLDING COMPANY TAX
* 20% penalty on undistributed personal holding company income.
* No foreign tax credit allowed against personal holding company tax.
* Tax rate: 15.3% (12.4% OASDI tax plus 2.9% Medicare tax).
* Surtax: 0.9% Medicare surtax on self-employment income in excess of $200,000 (single), $250,000 (married filing jointly), or $125,000 (married filing separately).
* Wage base: $132,900 of self-employment income for OASDI (maximum OASDI tax of $16,479.60; no ceiling on Medicare tax).
SOCIAL SECURITY TAX
Tax rate: 7.65%, imposed on both employer and employee (6.2% OASDI tax plus 1.45% Medicare tax). Wage base: $ 132,900 of wages for OASDI (maximum OASDI tax of $16,479.60; no ceiling on Medicare tax).
FEDERAL UNEMPLOYMENT TAX
Tax rate: Employers pay 6% on the first $7,000 of wages paid to each employee.
* Credit: Maximum amount of 5.4% for contributions paid to state unemployment insurance funds.
* Corporations owing $500 or more in income tax for the tax year must make estimated tax payments equaling the lesser of 100% of the prior-year or current-year tax liability. Large corporations must base the last three payments on the current-year tax liability.
* Due on the 15th day of the fourth, sixth, ninth, and 12th months of the corporation's tax year (April 15, June 15, Sept. 15, and Dec. 15 for calendar-year corporations).
CORPORATE ALTERNATIVE MINIMUM TAX (AMT)
* Starting in 2018, the AMT no longer applies to corporations.
NONRESIDENT AND FOREIGN CORPORATIONS
* Taxed on U.S.-source investment income at 30% (or lower under treaty).
* Net income effectively connected with a U.S. trade or business taxed at regular U.S. tax rates.
* Accumulated earnings tax of 20% of accumulated taxable income.
* Branch profits tax of 30% on dividend equivalent amount.
* 4% tax on U.S.-source gross transportation income that is not effectively connected with a U.S. trade or...