Question: How Does a Corporation Pay Income Tax?

Answer:

A corporation is a separate entity from its owners and shareholders. As a separate entity, the corporation's owners do not pay the taxes for the corporation. A corporation pays income tax by filing a corporate tax return on Form 1120 and paying the taxes as indicated by this return.

Corporate income taxes are paid at the corporate income tax rate, not the personal tax rate.

An S corporation is a special kind of corporation that pays income taxes at the personal tax rate of the owners.

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