I have a company, MyCorp, that's a single-person S-corp. If MyCorp earns $200, since it has no operating expenses, that money gets paid to me as income. Assuming a flat 25% tax bracket, I would get paid $150. If I have a work-related expense of $100 that I don't deduct and just pay out of pocket, I net $50.
But if MyCorp earns $200, pays the $100 expense, that leaves $100 in the MyCorp coffers. If I'm paid based on that, I would net $75, or $25 more than in scenario A.
So by deducting the expense as a pre-tax work expense, I save Tax_Rate * Expense_Amount. Is that accurate?
Submitted December 04, 2018 at 08:42AM by DudeOnACouch2 https://ift.tt/2RFxL9i
