60 seconds or less : Double Taxation
28 Feb 2022 · 1 min
1:00
C-corporations pay corporate income tax on profits, then owners pay personal income tax again when they withdraw money as salary or dividends. The same earnings get taxed twice.
C-corporations pay corporate income tax on profits, then owners pay personal income tax again when they withdraw money as salary or dividends. The same earnings get taxed twice.
All right, in 60 seconds or less, I have to basically talk to you guys about double taxation. I'm Damon Van Fleet, owner of PayLessTaxes.com and the PLT Firm, and in 60 seconds, here's what you guys need to know about double taxation. Double taxation generally happens on people who own C corporations, and literally what it— what happens that causes you to be taxed twice is essentially you own the corporation. So what happens is the corporation brings in all of the income and then it pays the expenses for the corporation, and then what's left, it gets taxed on that income. And then the other thing that happens is as the owner, whether you're taking dividends, whether you're taking wages, W-2, however you're taking your income out of that business, you then get that money and you get taxed on that. So that's how you get taxed twice. Typically on C corporations, and that's what it means to have double taxation.
