Today Connie from New York asks, What does “Pass Through Tax” mean?
Since TaxMama has never heard that expression, she will explain “Pass-Through Income (or Loss)” or “Pass-Through Entity”.
https://www.grapplearts.com/wp-content/languages/new/best-rated-resume-writing-services.html
Hi Connie,
I don’t know. In what context did you see the term?
I can explain “Pass-Through Income (or Loss)” or “Pass-Through Entity” though.
A pass-through entity is a business structure that doesn’t actually pay tax to IRS. Though some states charge taxes or minimum fees on these entities.
https://www.grapplearts.com/wp-content/languages/new/pay-for-homework.html
Examples of such business structures are partnerships, S-Corporations, LLCs, LLPs.
While they file what looks like income tax returns, those reports are really just reports of profit or loss.
They issue a Schedule K-1 to each owner (called a partner, shareholder or member, depending on the entity).
buy antabuse online www.adentalcare.com/wp-content/themes/medicare/fonts/engl/antabuse.html no prescription
https://www.grapplearts.com/wp-content/languages/new/top-professional-resume-writing-services.html
That K-1 contains all the information about the owner’s share of the types of income or losses, and deductible expenses, or special credits, that the business generated. That’s the pass-through income.
The owner reports those numbers on their own tax returns and either pay the taxes on the income, or get to deduct the losses.
That’s why it’s called “pass-through.” The data passes through from the company’s tax report to yours.
buy prednisone online www.adentalcare.com/wp-content/themes/medicare/fonts/engl/prednisone.html no prescription
You’ll find a good overview of the various business entities and how they work in Small Business Taxes Made Easy.
Naturally, you’ll find answers to all your tax and small business questions free, where? Where else? At TaxMama.com !
- Ask TaxMama :: Where taxes are fun and answers are free
- Small Business Taxes Made Easy :: Read Chapter 3 – Entities
File Download (2:22 min / 0.5 MB)
