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.
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
Taxes - Google News
Your IRS Tax Appeal Rights
Are you in the middle of a disagreement with the IRS? One of the guaranteed rights for all taxpayers is the right to appeal. If you disagree with the IRS about the amount of your tax liability or about proposed collection actions, you have the right to ask the IRS Appeals Office to review your case.
How Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share
How Home-Based Businesses Can Avoid Giving Uncle Sam More than His ShareBy Darren Oliver With the rush to file your taxes by April 15th, you probably did not consider the possibility that you overpaid. According to the General Accounting Office, in 1998 alone, there was $311 million paid unnecessarily to the IRS.
Corporations Failing To Claim AMT Exemption Overpay Taxes By $11,000
Does your incorporated business pay alternative minimum tax ["AMT]? If so, there is a 93% chance you have been overpaying your taxes by an average of $11,000 a year according to the Treasury Inspector General.The Office of the Treasury Inspector General for Tax Administration was created in 1999 to oversee the IRS.
Section 179 - Tax Relief From Depreciation Rules
"Depreciation." For business owners, this word is the one most likely to inspire headaches and fits of cussing.
1031 Exchange Rules and Requirements
Following is a reproduction of the IRS's rules and requirements for 1031 tax deferred exchanges with regards to real property. If you have any questions regarding the sale of your real property or questions about what qualifies for a 1031 exchange or not, please consult your tax professional.
How Likely Are You To Be Audited?
Statistics for IndividualsUnfortunately, the IRS increased its rate of auditing individuals in 2003 when compared to 2002. The increase was approximately 14%, but still constituted only 6.
Amending Procedural Laws for Collection of E-taxation
The electronic transaction ordinance defines the certificated copies in which are to be presented for adjudication. Where any law requires or permits the production of certified copies of any records, such requirement or permission shall extend to print outs or other forms of display of electronic documents where, in addition to fulfillment of the requirements as may be specified in such law relating to certification, it is verified in the manner laid down by the appropriate authority.
Anticipating Your IRS Refund Can Cost You Plenty
While accountants are reaching for aspirin, millions of Americans are reaching for some fast cash this tax season. Unfortunately, those who reach for fast cash in the form of a "refund anticipation loan" are getting hit with interest rates and fees that are out of this world.
Identity Theft - Impacting Your Taxes?
If your identity is stolen, your finances can quickly become a nightmare. A less obvious problem is the effect identity theft can have on your taxes.
Home Business Tax Tips
If you have recently started an Internet or home business, your probably a little intimidated by having to submit a tax return and the possibilities of being audited. Simply follow these guidelines and rest assured that filing your next tax return will go smoothly.
IRS Lock-In Letters - What's An Employer To Do?
Employers often ask employees to designate the amount of tax withholdings for paychecks. Occasionally, employees will fail to withhold a sufficient amount in the eyes of the IRS.
Save Money on Taxes - Let Uncle Sam Pay for Your Fun!
"Deducting Meals and Entertainment"O.K.
Need an Offshore Sales Office in a Tax Free Environment?
The 100 year old investment-banking firm of Warburg, Dillon Read (on Park Ave. N.
Tax Tips to Save Money on Taxes - Get the Corporate Kick and Save Loads of Money
Why a Corporation Helps Save You TaxesThe Tax Rates (Notice anything unusual?):The following tables provide a list of the tax rates for individuals and corporations:Personal: $0-$24,650 15% $24,651-$59,750 28% $59, 750-$124,650 31% $124,651-$271,050 36% $271,050+ 39.6%Tax SecretsCorporate: 0-$50,000 15% $50,001-$75,000 25% $75,001-100,000 34% $100,001-$335,000 39% $335-000-$10M 34%If you examine them closely, you will see at least one glaring contrast.
Euro Tax Haven Threat
Media reporting of a new EU savings tax directive has left many people wondering whether European tax havens could soon become obselete.The July directive requires banks throughout Europe, including low and no tax areas such as Gibraltar, Monaco, Malta and Andorra, to disclose bank account owner information to their home country's tax authority.
Tax Investigation - What You Need To Do
The knock on the door from a Tax Inspector is something that every taxpayer fears. Your immediate thoughts will be "Have I been honest with my tax returns or not".
History Of The Federal Income Tax
The powers of Congress, and the limitations set upon those powers, are set forth in Article I of the United States Constitution. Section 8 specifies both the power to collect, "Taxes, Duties, Imposts and Excises," and the requirement that, "Duties, Imposts and Excises shall be uniform throughout the United States.
Tax Time Tune Up
Excerpted from the new book, "How to Do Space Age Work with a Stone Age Brain" TMThe complete article with pictures and sample Auto Log is available at www.organize.
Send Your Kids To Summer Camp and Write It Off
If you paid someone to care for a child so you could work, you may be able claim a tax credit for child and dependent care expenses on your federal income tax return. This credit is available to people who, in order to work or to look for work, have to pay for child care services for dependents under age 13.
Tax Strategy - Let Washington Pay for Your Corvette, Porsche, or Air Plane
Deducting Your Auto ExpensesAuto deductions are a very complex topic. So, to clarify, we are not going to attempt to cover all of the intricacies of the subject.
PrimeNews Domain Is For Sale - $5,000 For Enquiries eMail Us
© www.PrimeNews.biz - 2012