in this course, what tax classification are we focused on?

What are the two types of taxation?

Type # 2. Proportional, Progressive, Regressive and Degressive Taxation: On the basis of method, that is the rate of taxation; taxes are clas­sified and compared into proportional, progressive, regressive and degressive. Prof. Taylor defined proportional, progressive, regressive and degressive taxation as follows:

What is taxation?

TAXATION I LESSON 1&2 Introduction to taxation, classifications, principles and the tax System Course Lecturer Dr. Suleiman Aruwa Associate Professor of Accounting f Definition of Tax Tax is defined as a compulsory contribution from individuals and or business organizations for the purpose of financing the expenditure of the government.

What is the catch with business tax classification?

The catch is that that these classifications are not recognized as a legal entity. All the revenues, expenses, and debts fall squarely on the owners’ shoulders, meaning personal property could be used to settle debts. Filing taxes is a simple matter. The owners and the business are considered one entity.

What are the features of a tax?

A tax is a compulsory payment levied on the persons or companies to meet the expenditure incurred on conferring common benefits upon the people of a country. (1) A tax is a compulsory payment and no one can refuse to-pay it. (2) Proceeds from taxes are used for common benefits or general purposes of the State.

What is the tax classification?

The three primary options for LLC tax classification include disregarded entity, partnership, and corporation. Within the corporate classification, two sub-options include C corporation and S corporation. Some of these classifications require forms to be filed with the IRS while others occur by default.

How do I choose a tax classification for my LLC?

LLC owners can choose the tax classification that is most advantageous to them. The choice is usually between the default classification—either disregarded entity or partnership, depending on whether there are multiple owners—or electing to be taxed as an S corporation to save self-employment taxes.

What is my tax classification twitch?

Once you decided that you stream as a hobby, all your income from Twitch should be claimed in your 1040 form in the "Other Taxable Income" box with your tax information. This adds up to your total earnings and falls under your income tax.

What are the two major classifications of taxes?

Two of these systems impact high- and low-income earners differently. Regressive taxes have a greater impact on lower-income individuals than the wealthy. Proportional tax, also referred to as a flat tax, affects low-, middle-, and high-income earners relatively equally.

What type of tax classification is a LLC?

LLCs are classified as “pass-through” entities for tax reasons, meaning the business profits and losses will flow through to the personal tax return of each member. An LLC can also elect to be taxed as an S-Corporation or a C-Corporation. To be taxed as an S-Corporation, the LLC must file IRS form 2553.

How do I know if my LLC is an S Corp or C-corp?

You'll find your corporation classification on your business returns. You can review previously filed tax returns or ask your accountant to review the returns. All corporations must file an annual income tax return. C corporations file IRS Form 1120 and S corporations file Form 1120S.

How do I claim Twitch on my taxes?

Taxes for Hobby Streamers Any money made from hobby activities is taxable and should be filed on the taxable earnings section of form 1040 (on line 21 labeled “other taxable earnings.”) If you made more than $600, Twitch should send you a 1099.

What do you have to fill out for Twitch affiliate?

Affiliate Eligibility At least 500 total minutes broadcast in the last 30 days. At least 7 unique broadcast days in the last 30 days. An average of 3 concurrent viewers or more over the last 30 days. At least 50 Followers.

How do I fill out tax information on Twitch?

Twitch requires all non-U.S. payees to provide valid taxpayer identification information by taking the tax information interview to certify your non-U.S. status by completing IRS Form W-8 or Form 8233. A taxpayer identification number (TIN) is not required unless you wish to claim a reduced rate of withholding tax.

What are the classification of direct and indirect tax?

Direct taxes include tax varieties such as income tax, corporate tax, wealth tax, gift tax, expenditure tax etc. Some examples of indirect taxes are sales tax, excise duty, VAT, service tax, entertainment tax, custom duty etc.

What are the classification of taxes in the Philippines?

There are four main types of national internal revenue taxes: income, indirect (value-added and percentage taxes), excise and documentary stamp taxes, all of which are administered by the Bureau of Internal Revenue (BIR).

What are the 4 types of taxes?

There are many different kinds of taxes, most of which fall into a few basic categories: taxes on income, taxes on property, and taxes on goods and services.

What is the classification of taxes?

Classification of Taxes: The taxes have been variously classified. Taxes can be direct or indirect, they can be progressive, proportional or regressive, and indirect taxes can be specific or ad-valorem. We spell out below the meanings of these different types of taxes.

What is regressive tax?

ADVERTISEMENTS: A regressive tax is the opposite of a progressive tax. In case of a regressive income tax, the rate is lowered as the income rises. Thus, under regressive tax system, the burden of the tax is relatively more on the poor than on the rich.

What is the difference between progressive and regressive tax?

ADVERTISEMENTS: A regressive tax is the opposite of a progressive tax.

What is indirect tax?

On the other hand, indirect taxes are those whose burden can be shifted to others so that those who pay these taxes to the Government do not bear the whole burden but pass it on wholly or partly to others.

What is ad-valorem tax?

On the other hand, an ad-valorem type of an indirect tax is levied according to the value of the commodity. For instance, sales tax in India is an ad-valorem tax as the rate of sales tax in case of several commodities is 10 per cent of the value of sales of the commodities.

What is the difference between direct and indirect taxes?

Direct and Indirect Taxes: The distinction between direct and indirect taxes is based on whether or not the burden of a tax can be shifted wholly or partly to others. If a tax is such that its burden cannot be shifted to others and the person who pays it to the Government has also to bear it, it is called a direct tax.

What is the government budget constraint?

Government Budget Constraint: The Government has to finance its expenditure including interest payments on accumulated public debt by using taxation, borrowing from the market (i.e. sale of new bonds) and use of printed money.

Learning Objectives

Discover the classification of individual for United States tax purpose.

Prerequisites

No advanced preparation or prerequisites are required for this course.

Education Provider Information

For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to [email protected].

What is progressive tax?

Progressive Tax: This is a tax which increases as the tax base (i.e. income or stock of wealth being tax) increases. It is commonly found in income taxation and the aim is to achieve equitable distribution of tax burden. For example Mr.

What are the different types of taxes in Nigeria?

In Nigeria, the common classifications are: Personal Income Tax, Companies Income Tax and Petroleum Profit Tax. Capital: These are taxes levied on asset. The asset could be human or other forms of assets. The Nigerian Tax Law recognizes two forms of Capital taxation i.e. Capital Gains Tax and Capital Transfer Tax.

What is the capital gains tax act?

Capital Gains Tax Act (CGTA) CAP C1 LFN 2004: This law imposes capital gains tax on any capital gains i.e. gains resulting from the disposal of chargeable assets, by both chargeable individuals and corporate entities throughout the Federation.

What is the meaning of ftax system?

In other words, a good tax system should not interfere with people’s willingness to work, produce, consume, save and invest. fTax System, Tax Policy, and Tax Laws Tax system is an embodiments of tax policy, tax law and tax administration.

What is proportional tax?

Proportional Tax: This is a tax that remains fixed regardless of change in the tax base. In proportional tax, all tax payers, both the rich and the poor are made to pay the same percentage of their income as tax. For example Mr.

What is consumption tax in Nigeria?

The most common forms of consumption tax in Nigeria are the Value Added Tax, Excise Duties and Customs duties. fClassification Based on Incidence of Tax An incidence of tax is the impact of tax on the person who pays tax to the Government.

What is direct tax?

Thus, a direct tax is that tax whose burden is borne by the person on whom it is levied.

What is the difference between direct and indirect tax?

A direct tax is paid by the person on whom it is legally imposed, while an indirect tax is imposed on one person, but paid partly or wholly by another, owing to a consequential change in the terms of some contract or bargain between them.

Can a person transfer the burden of a tax to another person?

He cannot transfer the burden of the tax to some other person. In other words, in the case of a direct tax both the impact and incidence of a tax fall on the same person. For example, income tax is a direct tax as its burden falls on the person who pays it to the government.

Is inheritance tax direct or indirect?

An income tax, an inheritance tax and so are other taxes on property generally regarded as direct taxes. On the other hand, taxes on commodities and transactions are generally regarded as indirect. A sales tax, a customs duty or an excise duty would be indirect taxes. According to A.R. Prest, “the distinction between direct ...

What tax classification should I use for my LLC?

If operating as a freelancer or in a low-risk industry, a sole proprietorship may make sense for you as a single-member LLC owner.

How to change default tax classification for an LLC

Changing your default tax classification to a corporation requires filing forms with the IRS. For an S-corporation, this is Form 2553.

Conclusion

Choosing your LLC tax classification is a big decision for your business. Things like ownership structure, asset protection, how you want to manage the business, long-term goals, and tax implications play a role when making the election.

Commonly asked questions (FAQ)

Listed below are frequently asked questions about LLC tax classifications.