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Question by American_Nawaab_786: I am a Independent Info Tech Contractor in Virginia. I want to switch to Corp-to-Corp but which one?
Which type of corportion is best to form and what are the benefits? I am looking for better tax benefits and write-offs.
Best answer:
Answer by PepsiLime
C-corp, income, expenses, profits, losses stay with the corporation, and the corporation pays all the taxes. The only way you can get money from the corp is through dividends, which aren’t deductible expense to corp, but are taxable income to you.
Other choice is an S-corp. All income, expenses, profits losses pass through to you via a K-1 and are reported on your income tax return, 1040.
C-corp on has federal tax if federal income, state tax depends on the state, Massachusetts has minimum $ 456 tax whether corp makes profit or loss. S-corp has no federal tax, but state tax depends on the state, MA has $ 456 tax for s-corp as well.
No real tax benefits and write-offs either way, although with C-corp charitable contributions are limited to 10% of taxable income before contributions, with s-corp charitable contributions flow-through to shareholders, but are subject to shareholders tax limits.
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ReneMank
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