A-C Corporation is defined as an entity that protects the owner’s assets from creditors in a c- corp. there is no limitation on the number of owners and the stock. In a S crop, there is the concept of double taxation. Income taxes, double taxation is a principle that refers to the same tax to be paid twice on income. The possible reason for the existence of double taxation is that corporation is considered as a separate legal entity from shareholders.
General Features of a S corp Tax Calculator
In general, after S corp tax calculation the taxable amount is equal to the total income minus expense and allowed deductions there are many different types of Business and different allowable accounting methods the exact method will vary according to the businesses’ corporations paste acts as a business they have to give a share of the percentage of profit to shareholders as pace attacks second times on divider.
The steps to compute a S corp tax calculator
- The first step is that we have to compute that global income that is aggregate Indian income and foreign income.
- The second steps involved the computation of tax on such global income as per the slabs of the rate applicable
- The third step is to compute the average rate of tax that is global income divide it by the amount of tax
- The fourth step involves the computation of an amount by multiplying foreign income with such average rates of tax and the final steps involved to compute tax paid in foreign countries.
Let us understand with an example
Here is an example: Mr. Manish a resident earned income in Indian Rupees 3 laths he also earned income from a foreign country which is rupees 1 lakhs.
So, the global income of Mr. Manish is rupees 400000 which is rupees (3 lakhs -r 1 lakhs) the tax
to be paid on global income is rupees 15000 the average rate of tax is rupees 3.75 (15000/400000”100). So, the required tax to be paid is rupees 3750 (100000”3.75/100). The tax to be paid in a foreign country is rupees 10,000 so from this example it is quite clear how does a s corp tax calculator work?
As discussed earlier double taxation is a principle that refers to the same tax to be paid twice on income. The possible reason for the existence of double taxation is that corporation is considered as a separate legal entity from shareholders. In a S corp shareholders are responsible for the liabilities and debts of the company. In a S corp, there is no provision for the protection of the personal assets of the shareholders.