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R. Klein, EA
R. Klein, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 2879
Experience:  Over 20 Years experience
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Hi, a question on tax implications for a Florida S corp owner.

Customer Question

Hi, a question on tax implications for a Florida S corp owner. Could you give the COMPLETE list of all taxes payable at any level (federal/state, corporate/personal) in the following example.

Example:
Florida S corp receives $2.0mln in revenues. It is an internet company (web service), all revenue comes from end users (who pay by paypal or credit cards) and from running ads.

Expenditures: $500k paid to google and facebook for publishing our ads to attract users to our web site; $100k paid to external contractors (not employed by the company); $400k paid to S corp employees in salaries, excluding the CEO who is also the S corp sole owner; $100k salary paid to the CEO who is the S corp sole owner and who is actively running the business.

Could you give the full breakdown of taxes paid at ALL levels. Use any reasonable assumptions where you don’t have enough info, just specify in your answer what those assumptions are. How much will the owner have at the end of the day in her PERSONAL bank account after all the taxes are paid.

Thanks
- Alex
Submitted: 9 months ago.
Category: Tax
Expert:  R. Klein, EA replied 9 months ago.

R. Klein, EA :

Thank you for contacting me about your Tax issue. I will work hard to help you understand the issue clearly.

R. Klein, EA :

The taxes described here are just INCOME and employment related taxes. There is not enough information in your question (nor is it possible) to determine taxes of all types and from all sources, such as sales tax, ad valorem tax, etc.

R. Klein, EA :

Revenue - 2000K

R. Klein, EA :

COGS and ordinary expenses = 500K + 100K + 500K salaries = 1100K

R. Klein, EA :

federal Payroll tax on 500K salaries = 500K * 7.65% = 38,250

R. Klein, EA :

Net Income = 2000 - 1100 - 38.25 = 861.75K

R. Klein, EA :

This amount passes to owner as profit.

R. Klein, EA :

Assuming owner is Single, no dependents, no itemized deductions, she has 100K salary + 861.75K profits for a total of 961.75K income

R. Klein, EA :

backing up, there is Florida Corporations tax.

R. Klein, EA :

FL tax base is 861.75K minus 25K exemption = 861.25K taxable x 5.5% FL tax

R. Klein, EA :

Florida tax is 47,369

R. Klein, EA :

So taxable passed to owner is 861.75 - 47.369 = 814,381

R. Klein, EA :

Total personal income tax is 298,642

R. Klein, EA :

Medicare & SS tax taken out of 100K salary of owner = 7,650

R. Klein, EA :

Personal Income = 100K Wages + 814,381 S Corp net profit minus 298,642 income tax minus 7,650 payroll tax = NET CASH

R. Klein, EA :

608,089 cash left

Customer:

Thanks for your answer. Could you clarify on Florida Corporations tax? I thought all S corp profits pass through to the owner and there is no Florida personal income tax.

Customer:

Could you shoot me a short email with your comment on Florida Corporations tax XXXXX@XXXXXX.XXX? As I say, I believe it shouldn't be applicable to S corp.

Thank you
Alex

R. Klein, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 2879
Experience: Over 20 Years experience
R. Klein, EA and 2 other Tax Specialists are ready to help you
Expert:  R. Klein, EA replied 9 months ago.
If your S Corp is a pure pass-through entity, then FL will not require a tax to be paid

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