Can You Take Advantage of the Pass-Through Tax?

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What is the pass-through tax? Do you qualify? How much money can it save your business? Our expert Wendy Yang explains.


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Transcript: The pass-through tax is a taxation method that's applicable for proprietorships, for partnerships, for LLC and for S Corps. It basically means on the federal tax level the profits of a company are not taxed on the business level, but passed through to the individual at the very end whether that's a sole proprietor, a partner, a member or a shareholder. So for example, if an entity earns $100 of profit, it's not taxed on the federal part, it's not taxed on the business level, but the $100 are directly passed to the individual so the individual is taxed for that $100, on that $100. For example a 20% and results in an 80% profit.