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IRS shows new data for entrepreneurs

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in Small Business Tax

The IRS recently issued its Winter 2015 Statistics of Income (SOI) Bulletin. (IRS Internal Release 2015-35, 2/27/15)

Alert: The new SOI Bulletin contains a wealth of valuable tax return income information relating to partnerships and sole proprietors. It generally covers the 2012 tax year.

The Winter SOI Bulletin was posted online. Starting with the Summer 2014 issue, SOI Bulletins are no longer published in printed form, due to budgetary restraints at the IRS.

Here are some of the key findings in the ­Bulletin.

Partnerships: The number of partnerships (and partners) in the United States continues to grow. In 2012, partnerships filed more than 3 million returns, comprised of more than 25 million partners. For the eleventh consecutive year, limited liability companies (LLCs) made up the majority of all partnerships. Almost half of all partnerships (49.15%) were in the real estate and leasing industries, as were more than a quarter of all partners (28.9%). The total net income increased from $580.9 billion in 2011 to $777.9 billion in 2012, or by more than one-third (33.9%).

Sole proprietors: For 2012, sole proprietors (excluding farmers) filed 23.6 million individual tax returns, an 0.5% increase from 2011. Profits increased by 7.9% from 2011 while total nonfarm sole proprietorship income jumped 6% (following a 3% increase in the prior year). Profits as a percentage of business income rose by 1.1% to 23.4%, the highest point in the past 25 years.  

The industries showing the largest gains were the professional, science and technical services sectors, which increased by 5.7% to $76.5 billion, comprising more than one-quarter of total profits (25.1%). Next in line were the health care and social assistance sectors, which accounted for 16.3% of total profits in 2012.

A little foreign intrigue

The new SOI Bulletin also included some interesting information about foreign receipts of U.S. income for 2011 as follows:

Income reported on Form 1042-S, Foreign Person’s U.S.-Source Income Subject to Withholding, totaled $568 billion, a 1.9% increase from 2010.

  • Withholding tax on U.S.-source income declined by 11.9% to $8.9 billion.
  • Almost 90% of all U.S. source income paid to foreign persons was exempt from withholding tax.
  • Residual U.S.-source income subject to tax was withheld at an average rate of 15%.
  • Interest payments made up the largest percentage of the total U.S.-source income reported on Form 1042-S in 2010 and 2011, accounting for almost half of the income (49.2%), a 7% increase from 2010.



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