Pass-Through Entity
Definition
A business whose income is not taxed at the entity level but passes through to the owners, who report it on their own returns. Sole proprietorships, partnerships, S corporations and most LLCs are pass-throughs.
Related Terms in US Tax
Form 1099-R
A US information return reporting distributions from pensions, annuities, retirement plans and similar accounts, used by recipients to report retirement income.
Sales Tax vs Use Tax
Sales tax is collected by a seller at the point of sale; use tax is owed by the buyer on taxable goods where sales tax was not charged, such as out-of-state purchases. Use tax prevents avoidance by buying across state lines.
Economic Nexus
A US sales-tax concept where a business must register and collect tax in a state once its sales or transactions there exceed set thresholds, even without a physical presence. It expanded sharply after the Wayfair decision.
1099-K Threshold
The level of payments processed through cards or third-party networks above which a payment settlement entity must issue a Form 1099-K. The threshold has been the subject of phased changes and should be checked for the year.
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