Federal Taxation FAQs

What is Income?

Gross income as defined by the Internal Revenue Service, means all income from whatever source derived.  This means all income from any sources, whether it be in the United States or abroad, with very few exclusions.

What is excluded from Income?

Certain items have been statutorily excluded from income; these items include but are not limited to: Gifts and Inheritances; Social Security Benefits; Interest on Municipal Bonds; Life Insurance Proceeds; Scholarships; Gain on the Sale of a Personal Residence (250K for single and 500K for married filing jointly); Contributions to capital received by a Corporation; etc.

How are taxes determined?

An Individuals tax liability is determined by the tax bracket he or she falls in. The chart below illustrates the 2016 income rates for U.S. individual taxpayers. The taxable income is determined by adding up all the income of the individual and then reducing that amount by any eligible deductions.

What happens if I don’t file and/or fail to pay taxes?

If you don’t file your taxes on time, and do not request an extension by the deadline, then the IRS can impose a failure-to-file penalty against you.  If you files your taxes, but fail to pay the taxes due, then the IRS can impose a failure-to-pay penalty against.  In addition to penalties imposed for failure-to-file and/or failure-to pay, the IRS will impose interest on any amount due. The penalties and interest can be severe, and increase as time goes on.

How are companies taxed?

If you are a sole proprietor or have ownership in a limited liability company, limited liability partnership, general partnership, limited partnership, limited liability limited partnership or an s corporation, you are taxed on your ownership percentage on your individual tax return.  Your income from any of the abovementioned entities flows through to your personal tax return and is taxed in the same way as the chart above.  There is no separate tax on the income of the entity.

Alternatively, corporations have a separate corporate tax on their income.  The chart below illustrates the 2016 corporate tax table.

Over But Not Over Tax Due
$0 $50,000 $0 plus 15% of amount over $0
$50,000 $75,000 $7,500 plus 25% of amount over $50,000
$75,000 $100,000 $13,750 plus 34% of amount over $75,000
$100,000 $335,000 $22,500 plus 39% of amount over $100,000
$335,000 $10,000,000 $113,900 plus 34% of amount over $335,000
$10,000,000 $15,000,000 $3,400,000 plus 35% of amount over $10,000,000
$15,000,000 $15,000,000 $5,150,000 plus 38% of amount over $15,000,000
$18,333,333 $18,333,333 35% of amount over $18,333,333

Chung, Malhas & Mantel’s Federal Tax Group assists businesses and individuals with a wide array of issues.  Our team of experienced business and tax professionals has helped individuals and businesses navigate the murky waters of the federal tax code.  With more than 80,000 pages, the federal tax code can present many challenges, but having the right team help you with those challenges can make all the difference.

We provide our clients with a wide range of federal tax services, including but not limited to, federal tax collection, entity formation and maintenance, asset protections, business succession planning, mergers and acquisitions, purchase and sale transactions, and general tax planning and advice.

We provide the following services:

  • Federal Tax Collection
  • Entity Formation & Maintenance
  • Mergers & Acquisitions
  • General Tax Planning & Advice

Read more about our corporate tax services