What is double taxation?
Double taxation occurs in a C corporation. Profits that are taken in are first taxed at the corporate rate and then taxed again as dividends on individual tax returns. C corporations pay federal taxes while S corporations do not. C corporations file quarterly tax while S corporations pay annually.
How do I avoid double taxation?
All corporations are filed as C corporations. You must elect S corporation status by filing Form 2553 within 75 days. In New York it is also required you file a form Ct-6 on or before the fifteenth day of the third month following the effective date of its certificate of incorporation. A federal S corporation whose election is approved must file Form CT-3-s within 2 ½ months at the end of each tax year.
*We are not lawyers or accountants and we can only provide you with up to date information from the state. However, each situation is different so consult your accountant or a tax professional before filling out these, or any other tax related forms.*