Neal,
I misinformed you about DC. DC is one
of the states that doesnât recognize the S-corp status. A S-corp
is treated as a normal corporation and the company has to pay taxes for its
shareholders.
So in your case,
Â
1120S will be prepared for Federal/ no taxes due
with return
Â
DC -20 will be prepared for DC income and the company
will pay taxes. Shareholders do not
need to file DC income tax return. All is done at the corporate level for DC.
Â
VA K-1 for VA will be prepared with form 1120s
and provided to the shareholders if there's any VA income by the S-corp.
Shareholders will pay VA income taxes thru their individual tax return.
So company will file return with Federal, DC and VA.
Company will pay DC taxes
Individual shareholders will pay federal & VA income taxes
thru their personal returns.
Income Tax Rate
Â
Tax rate for DC (with form DC-20 - at corporate
level) is 9.975% of taxable income.
Â
Tax rate for VA (with form VA760 - at individual
level) is 5.75% at maximum (see the attached tax table).
Business Personal Property Tax rate:
Â
DC - $3.40 per $100 of assessed value. But
the first $225,000 of taxable value is excluded. So you may not paying any
taxes.
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Alexandria - $4.75 per $100 of the assessed value.
Hope this clarifies your questions.
Let me know if you have any other questions.
Helen