What You Should Know About Double Taxation
Double taxation is a fairly complicated tax topic that is defined as income taxes that are paid twice on the same source of income. The most common example used to illustrate the principle of double taxation is the income tax imposed on corporate income and then taxed again when the dividends are distributed to shareholders of that corporation. So, the government receives taxes on the same pot of money twice. Is this fair?
Double Taxation: The debate
Historically, there has been significant debate about the fairness of double taxation – some arguing that the government via the IRS should only tax at either the corporate level or the personal level but not both. These critics say that double taxation damages the economy and takes money away from those individuals who invest and save.
Those who believe that the current double taxation concept is fair maintain that corporations are entirely separate from their stakeholders and without it wealthy individuals could benefit from both the dividends from owning many shares of stock while not having to pay tax on their personal income.
Impact of double taxation in international business
Double taxation can also come into play in some international financial transactions. If a person who lives in one country does business in another country, it is possible that individual may be required to pay taxes in both the country in which they reside as well as the country in which the business transaction takes place. Different countries have different rules about how this is handled, so if you are planning to do business internationally, the possibility of double taxation is definitely something that you should pay special attention to.
Other questions? Consult with an experienced tax firm
Double taxation can be a complicated issue to understand and you want to be sure that you fully understand the possible implications in the event that your income can be impacted. If you are concerned about double taxation or any other tax problems, you may want to considering consulting with a professional tax firm that can help you sort through the regulations, the nuances and help you come up with a solution that works well and even benefits you or your business.
Success Tax Relief has been partnering with individuals and businesses on tax issues for more than 30 years and has a reputation for straightforward communication, and overwhelming success negotiating directly with the IRS when needed. Success Tax Relief can help you and your business with questions related to double taxation, audits, routine tax preparation, offers in compromise, payroll tax issues, and installment agreements.
To speak with one of our experienced tax professionals, you can call us right now at 1-877-958-6638. We will provide answers about tax law and honest advice about potential tax problems that you are facing and the best way to resolve them. You do not have spend hours and hours trying to sift through information to try to understand complicated tax laws and regulations. Let Success Tax Relief make it simple.