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questions of students - 7:07:29 PM PST Total views: 12 Your...

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Subject: Question on SMLLC Reply Quote Set Flag Author: Anonymous Posted date: Sunday, January 10, 2010 7:23:12 PM PST Last modified date: Sunday, January 10, 2010 7:23:12 PM PST Total views: 18 Your views: 5 Next Post › Hi, Professor, How are you? I just have a question on SMLLC. Before the final Regs, IRS usually treated SMLLC as disregarded entity and imposed the payroll tax on owner. Does that mean owner of SMLLC needs to pay 12.4% social security tax and 2.9% medicare tax and employees do not need to pay them? After the final Regs, SMLLC is treated as separated entity. Does that mean owner only needs to pay 6.2% of social security tax and 1.45% medicare tax and employees need to pay the other half? In both situation, does the owner need to pay FUTA? Thank you very much Author: Gary Mcbride Posted date: Monday, January 11, 2010 7:07:29 PM PST Last modified date: Monday, January 11, 2010
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Unformatted text preview: 7:07:29 PM PST Total views: 12 Your views: 3 Previous Post Show Parent Post This is not an issue that will be tested in this class. First of all, the final regulations that you are referring to do not change the tax treatment of the sole proprietor. The owner of an SMLLC (disregarded entity) must pay self-employment (SE) tax on the income of the SMLLC, unless that income is otherwise exempt from SE tax (such as dividend income, interest income and rental income). The final regulations cause the SMLLC to be treated as a separate entity for purposes of the payroll taxes on the employees (not the owner of the SMLLC). The SMLLC is treated like a corporate employer for payroll tax purposes--just like any other corporation. For FICA, the employer pays half and the employee pays half. With FUTA, the employer pays it all....
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