Options for corporation profits ?

Question

If I start a corporation to collect rental income and there is 10,000 left after all expenses (profits) at year end , how is that taxed?

On my personal taxes?

Is it taxed separately before I take it?

Is it part of my MAGI I report to the IRS?

Can the corporation just retain the profits and pay taxes on it to keep it off my MAGI?

Thanks

Account Closed · Answer

@Steve Legnaioli

Steve there is defiantly an opportunity to the extent that your facts and circumstances meet the requirements for these contributions. There are phase outs based on income, filing status etc. that will need to be met for this to make sense. Again your facts and circumstances are what determine if there is a benefit to setting up these accounts. It’s not a one size fits all answer.   If you need a reliable CPA in your market I am sure someone can refer you.

Account Closed · Answer

@Steve Legnaioli

It’s pretty tough to change the past especially since the year is over with. Again I would consult with your CPA. Also, before you start any new ventures I would consult your CPA to make sure everything is structured appropriately for what your goals are.

The above is pretty vague, but the answer would change depending on each persons facts and circumstances.

Krystal Thomas · Answer

@Steve Legnaioli I'm not sure it's fair to say that CPA's in Key West are barely capable.  I know quite a few that are knowledgable and great to work with.  Let me know if you need a recommendation.

Steve Legnaioli · Answer

and yet I can set up a hsa or ira before tax deadline and stuff it full of money that changes last years taxes.

Can the same be done with a corporation and allow it to retain the money without passing through ?

Research hasn’t given me an answer and cpa’s in key west are barely capable

Steve Legnaioli · Answer

that makes sense, thank you. If I could present another scenario, let’s say I collected some rent last year from renting a room in my primary residence, this happened in 2019, it’s now 2020, I know that I can set up a IRA account or HSA account at this time (before tax time )and put money into it that  That would reduce my MAGI , would it be possible to create a corporation just before tax time so the rental income from last year could be deposited in to the corporation account, and be retained there (For a future Investment)Without it being passed through and landing on my personal taxes.

My goal is to reduce my MAGI , or to keep the rental income From the last four months of last year Off my personal taxes. I don’t mind paying taxes on the money, I don’t even mind paying higher taxes on the money through a corporation, this has to do with hitting the Obamacare phaseout number. I know what I have to do for the coming year, but last year it isn’t sorted out yet.

Shaun Weekes · Answer

S corps and C corps get taxed differently.  I think your best bet is to consult a CPA that deals with RE investments and Copr tax structure.