Corporate Tax Planning
Corporations may be excellent tax planning vehicles, especially for taxpayers working outside Israel and in light of Israeli tax reform. "C" Corporation tax rates are 15% on taxable income up to $50,000, 25% from $50,001 - $75,000 and 34% from $75,001 - $100,000, with higher rates for higher taxable incomes. Starting in 2018 the tax rate is a flat 21%.
"S" Corporations, Limited Liability Companies ("LLC's") and certain Trusts are called pass-through entities. The pro-rata share of the pass-through entity's income must be reported on the taxpayer's personal income tax return and is taxed at the individual's personal income tax bracket. Starting in 2018, income from pass-through entities above $315,000 will be taxed at a maximum rate of 21%. There are adjustments to income that will have to be applied. Having an entity can be even more advantageous under the new tax law.
If you have a foreign corporation, you may be required to file form 5471 (Information Return of U.S. Persons with Respect to Certain Foreign Corporations) with your tax return (please contact our office for more details). The U.S. is shifting to a “territorial” tax system for corporations. For 2018, there will be a one-time repatriation tax on the Earnings & Profits of a foreign subsidiary or CFC at a rate of 15.5%. Going forward income not withdrawn from a corporation can generally remain in place. It will still be taxed when distributed as salary or as a dividend.
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"S" Corporations, Limited Liability Companies ("LLC's") and certain Trusts are called pass-through entities. The pro-rata share of the pass-through entity's income must be reported on the taxpayer's personal income tax return and is taxed at the individual's personal income tax bracket. Starting in 2018, income from pass-through entities above $315,000 will be taxed at a maximum rate of 21%. There are adjustments to income that will have to be applied. Having an entity can be even more advantageous under the new tax law.
If you have a foreign corporation, you may be required to file form 5471 (Information Return of U.S. Persons with Respect to Certain Foreign Corporations) with your tax return (please contact our office for more details). The U.S. is shifting to a “territorial” tax system for corporations. For 2018, there will be a one-time repatriation tax on the Earnings & Profits of a foreign subsidiary or CFC at a rate of 15.5%. Going forward income not withdrawn from a corporation can generally remain in place. It will still be taxed when distributed as salary or as a dividend.
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