Let us create a 3D eBook for you!
Let us create a 3d Digital eBook for you! DigyCat.com

Reducing Taxes Through Dividend-Salary Mix Calculations


Should I take wages or dividends from my privately ownedcorporation? What is the best way of taking money out of my company? In other words, what will result in theleast amount of income taxes?

A Canadian accountant will perform a dividend-salary mix calculation to determine the best way of withdrawing money from the corporation.

Even though Canadian income tax laws are different from other jurisdictions, some of the same principles of tax planning will still apply.

In order to qualify for Canada Pension Plan (C.P.P.) benefits or to make Registered Retirement Savings Plan (R.R.S.P.) contributions, there must be some earned income. This requires the payment of wages. In fact, many accountants will make sure that their clients have maximized their C.P.P. and R.R.S.P. contributions for the year in order to ensure sufficient future retirement benefits, even if it costs a little more in income tax and/or payroll taxes.

On the other hand, the Dividend Tax Credit reduces the tax payable on dividends received from the corporation, since the corporation has already been taxed on its income. Therefore, the accountant may recommend that the corporation pay some dividends.

Sometimes, if the owner doesn't require the cash, the income is simply retained inside the corporation and tax is paid at the lower small business rate by the corporation. If the corporation had income in excess of the Small Business Deduction, it likely would pay it out in wages.

Depending on the circumstances of the taxpayer, wages may be the least expensive way of taking money out of the corporation. Sometimes, dividends are better. Generally, a mix of both is required.

An accountant will have to balance many factors to come out with the optimal mix for you. He will consider your family situation, other income sources, losses, investment and retirement objectives, et cetera. Keep in mind that the lowest possible tax bill for the current year is not always in your best interests.

RESOURCE BOX:

J. Stephen Pope, President of Pope Consulting Inc., http://www.popeconsultinginc.com/ has been helping clients to earn maximum business profits for over twenty-five years.

For valuable Work at Home Small Business Ideas, visit: http://www.yenommarketinginc.com/

For more information about income taxes, visithttp://www.yenommarketinginc.com/income-taxes.html


MORE RESOURCES:

Taxes - Google News

This RSS feed URL is deprecated

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news

10 Ways to Legally Reduce Your 2018 Taxes - Motley Fool


10 Ways to Legally Reduce Your 2018 Taxes
Motley Fool
Homeowners are privy to a number of tax benefits, the most lucrative of which is typically the mortgage interest deduction. Now you could just make your standard 12 monthly mortgage payments in 2018 and call it a day, but if you want to eke out some ...

and more »

Indian government likely to reject Apple's request to delay new import taxes - 9to5Mac


9to5Mac

Indian government likely to reject Apple's request to delay new import taxes
9to5Mac
Wistron assembles iPhone SE models in India for Apple, but the components are all imported. Under a current agreement, most of these components can be brought into the country tax-free, but the government wants to impose import tariffs on more of them ...
Apple, India wrangle over import tax on mobile parts: sources Reuters

all 8 news articles »

Small Investors Face Steeper Tax Bill Under Senate Proposal - Wall Street Journal


Wall Street Journal

Small Investors Face Steeper Tax Bill Under Senate Proposal
Wall Street Journal
A little-discussed provision in the Senate tax bill could lead to a higher tax bill for millions of small investors and cause many to unload stocks before year-end to avoid those costs. Under the Senate's $1.4 trillion tax overhaul, investors would ...

and more »

Most Americans Expect a Tax Refund in 2018 - And That's Not a Good Thing - Yahoo Finance


Yahoo Finance

Most Americans Expect a Tax Refund in 2018 - And That's Not a Good Thing
Yahoo Finance
If there's one thing pretty much all Americans can agree on, it's that taxes are a major burden. Not only does losing a portion of our income constitute a harsh blow, but the process of filing taxes can be downright stressful. But filing hassles aside ...

In Trump's America, Even White People Can Face Poll Taxes, if They Lean Liberal - Daily Beast


Daily Beast

In Trump's America, Even White People Can Face Poll Taxes, if They Lean Liberal
Daily Beast
The Granite State's Republican-controlled state legislature has responded to narrow defeats — we're talking less than a percentage point — to Democrats in the 2016 election by proposing a poll tax that targets college students: a vital Democrat ...

and more »

Precision sacrificed for speed as GOP rushes ahead on taxes - Chicago Tribune


Chicago Tribune

Precision sacrificed for speed as GOP rushes ahead on taxes
Chicago Tribune
The specific legislation that probably will become law, sold as a middle-class tax cut but featuring a massive corporate rate reduction at its center, is moving from release toward passage without any hearings, unusual for a bill of such magnitude. And ...
Susan Collins Says She's Not a Definitive 'Yes' on Taxes New York Magazine
Today in Taxes: Busy Behind the Scenes Wall Street Journal
Republican tax bill would tie the hands of blue-state governments Washington Examiner
Bloomberg  - New York Times  - AZCentral.com
all 257 news articles »

8.8 million Americans face big tax hike if Republicans scrap the medical deduction - Minneapolis Star Tribune


Minneapolis Star Tribune

8.8 million Americans face big tax hike if Republicans scrap the medical deduction
Minneapolis Star Tribune
Anne Hammer is one of millions of elderly Americans who could face a substantial tax hike in 2018 depending on the final negotiations over the Republican tax bill. In her retirement community in Chestertown, Md., it's the big topic of conversation ...
As California burns, Congress plans to slash tax write-offs for fires and other disasters Los Angeles Times

all 29 news articles »

Scoop: Trump's closing argument on taxes - Axios


Axios

Scoop: Trump's closing argument on taxes
Axios
Scoop: Trump's closing argument on taxes. Photo: Alex Brandon / AP. On Wednesday, President Trump will deliver his closing argument on tax reform to an audience made up largely of young people and middle-class families whose personal stories will be ...

and more »

Taxes and the Safety Net - New York Times


New York Times

Taxes and the Safety Net
New York Times
Make no mistake: The tax cuts for corporations and wealthy people that Congress is determined to pass will lead to major cuts to health and economic security for the rest of us. The Congressional Budget Office anticipates that Medicare alone will be ...

and more »

LargeFriends.com - the best dating site for plus-sized singles!
SuccessfulMatchCentral.com - the best dating site for plus-sized singles!

PreLaunchX

PrimeNews Domain Is For Sale - $5,000 For Enquiries eMail Us

© www.PrimeNews.biz - 2012

home | site map | links