Video: Calculating Estimated Tax Payments for C Corporations

Tax planning for C corporations involves strategizing to minimize tax liability through lawful use of tax laws and regulations while considering the timing of income, deductions, and credits, and the selection of investments and types of revenue.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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All right, talking about making our estimated tax payments, we want to avoid penalties. I mean, this very similar concept to individuals as well. I mean, all entities have to pay taxes, estimated taxes. This is why you've got withholding, but guess what? Corporations don't have withholding. They make estimated tax payments. You, if you're working for a company, a accounting firm, anything like that, that's why you get income withheld from your paycheck. They give that money to the government and that's essentially your payments so that you're not going to get hit with a fat bill at the end of the year. C-corps, they're required to make estimated tax payments if they expect to owe a certain amount of tax. To avoid underpayment penalties, they generally need to pay the smaller of 100% of the tax shown on the current year's return or 100% of the tax shown on the previous year's return. So just in planning, right? What's the safest thing to do? You probably just want to pay 100% of the tax that was shown on the previous year's return. So if we paid $50,000 in tax last year, we probably want to just prepay $50,000, maybe even a little bit more just to be safe. Again, you got to play nice ball with the IRS. Here's a scenario. We've got XYZ Corp. Now this is a rule. You definitely want to memorize that if you don't have it memorized already. XYZ Corp, we had a $200,000 tax liability last year. The expected tax liability this year is $250,000. The corporate tax rate is 21% and we got to pay quarterly. Now that's just a rule. That's just how it works. You pay quarterly if you're a corporation. How do we calculate the estimated tax payments?

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C corporations

Module: 3 Concepts, 30 Videos

Corporations: Consolidated Tax Returns Overview

1:22

Introduction to Consolidated Tax Returns

2:25

Entities Not Able to File a Consolidated Return

3:20

Requirements for Affiliated Groups