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Currently taxpayers pay 1.45% Medicare Tax on their earned income. This is from a W-2 for employees and net-income from self-employed individuals. The employee pays this amount and the employer matches it, therefore they remit 2.9% to the government. A self-employed individual is considered to be both the employer and employee and therefore currently pays 2.9% Medicare Tax.
Business owners can maintain their corporation as a regular or "C" Corporation. Alternatively, if they are eligible, they may want to make a Subchapter S Election. Both are treated as separate legal entities. Here are the differences however:
While a C Corporation is a separate legal entity, it is also a separate taxable entity. The corporation will pay income taxes on any … Continue reading »