One of the most controversial topics in the financial world is the discussion of capital gains and dividend taxes. High relative tax rates on the capital income, especially one that is originating from the corporate sector, can have a direct inverse effect on the economic growth by impeding and discouraging investment. Corporations must pay corporate income tax on their capital gains and profits, which enables them to distribute the rest of the dividends between shareholders.
And the cycle doesn’t end there, as the shareholders have to pay an individual-level, additional amount to the government on the received amount. If you want to know more about how the two layers of taxation on corporate income can affect the overall tax rate on capital income, find a tax professional for corporate tax rate. In the recent years tax preparers and accountants have become quite concerned about the economic damage tax hikes are causing to their clients’ businesses. High corporate taxes on capital income don’t just affect investment opportunities, but can also hinder the market value of any material item like a house or a commercial property.
Our professional accountants at the A. L. Simon & Associates in Libertyville, IL define capital gains as the profits that are generated from capital assets like a piece of land, art, corporate stock or business. Although they are usually incorporated in taxable income, they are often taxed at lower rates than other categories, because, according to the new law, most long term capital gains have a top rate of 15%. However, it cannot be discounted that a variety of other taxes are levied against different kinds of capital gains, which makes it difficult for the taxpayer to pay the liability.
But with the help of expert tax preparers at A. L. Simon & Associates, located in Libertyville, IL, you can gather sufficient knowledge about handling your tax liabilities. Following is an overview of how capital gains taxes are calculated.
A minimal 5% difference can make a huge impact in the tax returns that you receive for a particular asset. If you reside in the 39.6% income tax bracket then you will be subjected to pay the increased amount of capital taxes on gains. The tax bracket applies to you, if your taxable income exceeds the amount of $400,000 and $450,000, if you file jointly with a spouse.
Most of the tax preparers will advise you to hold onto an asset for a longer period than one year, as it can help you qualify for long-term capital gains tax rate, which is considerably lower than other tax categories. However, our accountants at the A. L. Simon & Associates located in Libertyville, IL, shed some light on the strategies that can help you lower your corporate tax bill in the future.
IRS has a provision for homes that helps in avoiding capital gains on home sales as it is one of the biggest investments people make in their whole lives. To qualify, you must be a homeowner for more than two years including the 5 year time period leading up to the sale of the property and must have resided in that home for at least 2 years. Moreover, you mustn’t have excluded another home from tax in the last 5 years.
Find a tax preparer to help you understand how corporate taxes can be minimized by rebalancing them. This can be done by investing that money into underperforming investments. This is a better strategy than reinvesting dividends in the same investments that paid for them.
IRA’s, 401(k) Plans or 529 accounts can help your investments grow without accruing any liability or tax deference. This means that you won’t have to pay any capital gains even if you sell your investments that reside within these accounts.
Corporate taxes rate on capital gains can add a significant amount to your tax bill and increase your tax liability. If you think that they apply to you, it is better to consult a professional accountant or tax preparer, who can advise you on the finer points of the matter.
If you want to find a tax professional for corporate tax rate contact us. Our expert tax preparers can provide you with tailored advice and comprehensive information about corporate tax rates. To know more about our services, visit us at 1580 South Milwaukee Avenue, Suite 418 to meet with our accounting team personally or simply give us a call us at (847) 913-0650 to schedule an appointment. For further information, click the link below.
