Where Form 1120 C Liability 2023-2024

Hello and welcome to this session. This is Professor for Huntingdon's. In this session, we will look at how to calculate tax liability for corporations. So, the corporate income tax rate is different from the individual income tax rate. We will be focusing on the corporate tax schedule. For corporations, the tax is calculated based on a different schedule. Let's start with the tax rate for taxable income between $0 and $50,000. For the first $50,000 of taxable income, the tax rate is 15%. Therefore, the tax bill would be $2,500. If the taxable income is above $50,000 but below $75,000, for example, $60,000, the tax rate falls between the 50 and 75 tax bracket. In this case, the tax liability would be calculated as follows: The tax liability would be $7,500, which is the tax on the first $50,000 of taxable income, plus 25% on the amount above $50,000. In this case, the amount above $50,000 is $10,000. Therefore, the tax bill would be $7,500 + $2,500, resulting in a total of $10,000 for a taxable income of $60,000. To further understand how the tax liability is calculated, let's clear the previous example and work with a new taxable income of $90,000. For a taxable income of $90,000, the tax liability can be calculated as follows: The first $75,000 is taxed at a rate of $13,750, which is the tax on the first $50,000 (15%) and the next $25,000 (25%). The remaining $15,000 (difference between $90,000 and $75,000) is taxed at a rate of 34%. Therefore, the tax liability would be $13,750 + ($15,000 * 0.34), resulting in a total of $18,850 for a taxable income of $90,000. When reading the tax schedule, the figures such as $13,750 or $22,250 represent the taxes up to a certain income threshold....