Tax plan

Discussion in 'Trucker Taxes and Truck Financing' started by cat smoke, Dec 16, 2017.

  1. cat smoke

    cat smoke Light Load Member

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    I keep seeing pass-through income that one can do without paying a bunch of taxes? I'm trying to make sense of the new tax plan, but I am unsure. I am currently a sole proprietor. Should I form a LLC to get the tax break if that is what it really is?
     
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  2. Derailed

    Derailed Road Train Member

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    An S corp is what gives you the pass through, however if this new tax plan goes through I am wondering if one would be better off with a regular C corp being it will bring a lower tax rate for corporations
     
  3. Rickp

    Rickp Light Load Member

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    Llc is taxed as a pass through
     
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  4. Scooter Jones

    Scooter Jones Road Train Member

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    I have an LLC filing as an S Corp classification. One of the benefits of classifying yourself as an employee of the S Corp is being able to take a dividend out of the S Corp with is taxed (in my case) at a 15% rate. That is considerably less if I were to run that same amount through as a schedule C sole proprietor.

    There are obviously red flags if one takes an inordinate amount out as a dividend. When I did my research the ratio should be around 75% W-2 wage and 25% dividend.

    Being able to get the S Corp classification from the IRS is not a given either. There are a few hoops you have to jump through, which I would recommend a competent CPA help you with.
     
  5. BrandonCPA

    BrandonCPA Bobtail Member

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    @cat smoke You will want to do an LLC and have it taxed as an S corporation. There isn't a dividend like Scotter is suggesting. There are distributions, which are tax free relative to the amount of basis you have in your stock. With the 2018 tax changes and LLC will be more advantages due to new deduction for flow through income that will be taken on the personal tax return.
     
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  6. Gearjammer79

    Gearjammer79 Road Train Member

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  7. Scooter Jones

    Scooter Jones Road Train Member

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    My bad, I MEANT to say distributions, not dividends.
     
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  8. Crisvalencia90

    Crisvalencia90 Bobtail Member

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    Does anyone recommend ATBS to do their taxes?
    Or can I get good suggestions on an excellent trucking CPA to do taxes for my first year filing?
     
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