Posted on 08/10/2020 12:34:51 PM PDT by SJackson
The Bidens used an S-corp to avoid paying more than $500,000 in levies for Medicare and ObamaCare.
Joe Biden responded to President Trump’s partial suspension of payroll-tax collections with a statement calling it the “first shot in a new, reckless war on Social Security.” He continued: “Our seniors and millions of Americans with disabilities are under enough stress without Trump putting their hard-earned Social Security benefits in doubt.”
Mr. Biden’s objections might be more persuasive had he and his wife, Jill, not gone out of their way to avoid funding seniors’ entitlement benefits. According to their tax returns, in 2017 and 2018 the Bidens and his wife Jill avoided payroll taxes on nearly $13.3 million in income from book royalties and speaking fees. They did so by classifying the income as S-corporation profits rather than taxable wages.
The Bidens did pay themselves “salaries” from their corporations—CelticCapri Corp. and Giacoppa Corp.—of nearly $750,000 between them over two years, and they paid full taxes on that income. But they circumvented the payroll tax on the nearly 95% of their income that remained. A tax expert interviewed by the Journal in 2019 called the Bidens’ scheme “pretty aggressive”; another told the paper it served solely to avoid the payroll taxes.
...snip...
The media have largely ignored the Bidens’ accounting legerdemain, fixating on Mr. Trump’s tax returns instead. But at least the president isn’t looking to raise taxes on everyone else.
(Excerpt) Read more at wsj.com ...
S-corps advantage is paying dividends on stock ownership in a frequency determined by the board. The minimum $$ payout is determined by the IRS for all company officers. Conceivably, you could make millions through stock ownership and pay zero in SS payroll taxes.
I don’t know all ins and outs of tax law.
So are book royalties subject to social security taxes?
This Subchapter S corporation which paid them salaries, is that corporation their “employer” which is supposed to pay social security taxes???
S corp income is not subject to payroll tax but s corporation is required to pay reasonable salaries to owners. What is considered reasonable is a judgment call.
It’s not surprising that they would try to structure things to pay minimal taxes on their income.
But we could discuss the ethics of doing this, if not the legality, assuming it’s all perfectly legal.
Exactly right and $750k is likely pretty "reasonable". People also forget that he only pays SS tax on the first $130k or so and then it's only 1.45% Medicare tax he's avoiding AND he's paying the .9% medicare surcharge so, based on the size of the numbers, it's a significant savings but really isn't much as a percentage of income. It's also the exact kind of thing I recommend to my business clients so, while I'm damned sure no Biden fan, it isn't something he should be dinged for.
Since we're on this subject anyway, articles like this are the main reason I don't want candidates to have to release tax returns. The potential for "spin" on this kind of thing is at stupid levels. We've got 50 years of Biden politics to hold against him. If we go after him for tax stuff then the other side is going to demand Trump's tax stuff.
They need to subpoena Biden’s tax records for the last 50 years like they did for Trump.
This should be an interesting thread.
The difference between tax avoidance and evasion is 10-20 in Leavenworth, said an accountant of mine years ago.
A legal way of avoiding some taxes is to form a Closely Held Type S corporation. I know as I did it many years ago. Wife and I alternately held all the offices required. I did so to lower my net income to the point we didn’t have to pay payroll tax. Of course I understood at the other end when I was of age to receive SS it would be much a much lower monthly amount, had I not incorporated.
I, instead invested the yearly maximum to IRA’s for us and it paid off handsomely, considering the occasional disaster on the Stock Market.
I am going out on a limb here in saying I would imagine that most folks with wealth do the same, regardless of political persuasion.
Since the income is entirely generated by labor and not by capital investment I have a hard time seeing how any of it could be considered s corp income.
Biden Family motto: TAXES ARE FOR THE LITTLE PEOPLE!
I would BET that the Biden Crime Family Slush Fund has MULTI MULTI MILLIONS somewhere in an OFF SHORE BANK ACCOUNTS!
WTH haven’t we known this before???
I assume the argument included hired labor to assist in writing and booking speaking engagements and included salary for ghost writers, editors, promoters, speech writers etc. The income attributable to the labor of others would be acceptable as income that is not from services or owner.
levies
Maybe sticking with obamacare not a tax?
https://www.irs.gov/businesses/small-businesses-self-employed/levy
An IRS levy permits the legal seizure of your property to satisfy a tax debt. It can garnish wages, take money in your bank or other financial account, seize and sell your vehicle(s), real estate and other personal property.
If you receive an IRS bill titled Final Notice of Intent to Levy and Notice of Your Right to A Hearing, contact us right away.
So are book royalties subject to social security taxes?
evidently irs has said so also and sent them a letter.
but fica tax has a cap of 138,000 i think, ALL of it is subject to medicare tax which is 2.9% for self employed.
Not if the book rights are owned by the S Corp.
An S Corp is similar to an LLC, the difference being the income passes through in the form of dividends, except for the salaries of the members.
BTW, while those dividends do not count towards members' Social Security income, neither does it count against the early retirement earnings limit and benefit reduction.
Yes, the corporation pays the employer side of Social Security and Medicare payroll tax, but only on the salaries, not on the dividends, which are not subject to the Social Security and Medicare payroll tax.
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