C-Corp Tax Benefit Explorer (2024)
Navigate Corporate Tax Credits & Penalties
This tool helps you understand how to use tax credits to lower your C-Corp's tax bill and how to avoid common penalty taxes.
General Business Credit (GBC) Limitation Calculator
The GBC combines many individual credits, but its use is limited. Enter your corporation's tax liability to see your maximum allowable credit for the year.
Net Income Tax
$0
Max Allowable GBC
$0
Other Key Credits & Carryovers
Foreign Tax Credit
Prevents double taxation. The credit is limited to the U.S. tax liability on foreign-source income.
Carry Back1 Year
Carry Forward10 Years
General Business Credit
Unused credits can be carried over to other tax years.
Carry Back1 Year
Carry Forward20 Years
Penalty Taxes to Avoid
The tax code includes two major penalty taxes (both at a 20% rate) to prevent corporations from being used as personal tax shelters. Understanding the triggers is key to avoiding them.
Accumulated Earnings Tax
Trigger: Retaining earnings beyond reasonable business needs, instead of paying dividends.
Key Benefit / Shield:
A lifetime credit of $250,000 ($150,000 for Personal Service Corps). This tax is not self-assessed and is only imposed by the IRS upon an audit.
Personal Holding Company (PHC) Tax
Trigger: Being closely-held (>50% owned by 5 or fewer individuals) AND having primarily passive income (>60% from dividends, interest, rent, etc.).
Key Benefit / Shield:
This tax is completely avoided if the corporation distributes all of its net income as dividends. This tax **is** self-assessed on the corporate tax return.
