jacques001
Junior Member
What is the name of your state (only U.S. law)? Massachusetts
Suppose I run an LLC that has its own business savings/checkings account. I receive money from a customer and there is a period of time where the money needs to be held before going to its final destination. If the money is held in a personal account instead of the LLC account in my name (as personal accounts generally have higher interest than business accounts), and this personal account has been used exclusively for the LLC (I don't also deposit money into it from my other personal accounts or use to buy groceries, etc.), and the account earns interest.
If I return this interest to the customer, does that mean the customer will need to pay taxes on it if necessary, even though the bank may have recorded the interest in my name (since my name was on the account)? Or do I pay taxes on it, and deduct this from the total interest the customer would have received?
To simplify, the customer's money earned $10 in interest while sitting in an account that is in my name but used exclusively for the LLC. The bank will report that this account earned $10 in interest to the IRS, presumably, and that since the account is in my name, I will need to pay the taxes on it. So when I provide the customer their interest, it is legal for me to deduct the taxes I'll have to pay, e.g. if the $10 is taxed at 10%, I return to the customer $9, keeping the $1 to pay what I owe to the IRS. In this scenario, does the customer have to report/pay taxes on the $9 they now receive (that would be double taxation, right?) when they report it as income?
Suppose I run an LLC that has its own business savings/checkings account. I receive money from a customer and there is a period of time where the money needs to be held before going to its final destination. If the money is held in a personal account instead of the LLC account in my name (as personal accounts generally have higher interest than business accounts), and this personal account has been used exclusively for the LLC (I don't also deposit money into it from my other personal accounts or use to buy groceries, etc.), and the account earns interest.
If I return this interest to the customer, does that mean the customer will need to pay taxes on it if necessary, even though the bank may have recorded the interest in my name (since my name was on the account)? Or do I pay taxes on it, and deduct this from the total interest the customer would have received?
To simplify, the customer's money earned $10 in interest while sitting in an account that is in my name but used exclusively for the LLC. The bank will report that this account earned $10 in interest to the IRS, presumably, and that since the account is in my name, I will need to pay the taxes on it. So when I provide the customer their interest, it is legal for me to deduct the taxes I'll have to pay, e.g. if the $10 is taxed at 10%, I return to the customer $9, keeping the $1 to pay what I owe to the IRS. In this scenario, does the customer have to report/pay taxes on the $9 they now receive (that would be double taxation, right?) when they report it as income?