Accumulated Earnings Tax (AET)
- Designed to encourage corporations to pay dividends
- Corporations can accumulate $250,000 without establishing a business need
- Tax is in addition to normal corporate tax
- If the corporation retains earnings and profits to avoid income tax to its shareholders and increase share price, it is subject to an annual AET penalty equal to 15% of its accumulated taxable income for the year
Dividend Received Deduction
- "Corporate shareholders" are allowed an income exclusion for dividends received from another corporation
- 100% exclusion if ownership in the dividend paying firm is 80% or greater
- 80% exclusion if ownership in the dividend paying firm is between 20 to 80%
- 70% exclusion if ownership in the dividend paying is 20% or less
Corporate Tax Rates
|If Taxable Income Is||The Tax Is:|
|Not over $50,000||15% of the taxable income|
|Over $50,000||but not over $75,000||$7,500 plus||25% of the amount over $50,000|
|Over $75,000||but not over $100,000||$13,750 plus||34% of the amount over $75,000|
|Over $100,000||but not over $335,000||$22,250 plus||39% of the amount over $100,000|
|Over $335,000||but not over $10,000,000||$113,900 plus||34% of the amount over $335,000|
|Over $10,000,000||but not over $15,000,000||$3,400,000 plus||35% of the amount over $10,000,000|
|Over $15,000,000||but not over $18,333,333||$5,150,000 plus||38% of the amount over $15,000,000|
|Over 18,333,333||35% of the taxable income|
|Qualified personal service corporations are taxed at a flat rate of 35% of taxable income|
TaxesDouble taxation refers to income taxes being imposed twice on the same source of earned income.
Financial AdvisorDividends are taxed differently than other investment income. Here are some strategies to help lower taxes on dividends.
TaxesLearn how dividends are taxed by the IRS, and understand the different types of dividend income as well as the capital gains tax rates.
TaxesA corporate tax is a tax levied on the profits a corporation generates.
TaxesTaxable income is the net of gross income and allowable deductions.
TaxesIndividuals in the 25% or higher tax bracket pay a 20% tax on long-term capital gains.
TaxesTo avoid taxation, businesses do careful tax planning, taking into consideration more than one country's taxation system.
TaxesWhen you file your taxes this year make sure that you have claimed all taxable income. Here are ten things that you might not know are taxable
InvestingLearn about the basics of mutual fund dividend taxation, including how and why mutual funds pay dividends and when different tax rates apply to dividend income.