Tax Rates Reflect Lifestyle: Difference between revisions
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Revision as of 06:19, 15 September 2026
S is for SPLIT. Income splitting is a strategy that involves transferring a portion of greenbacks from someone who is in a high tax bracket to a person who is within a lower tax bracket. It may even be possible to reduce the tax on the transferred income to zero if this person, doesn't have got other taxable income. Normally, the other body's either your spouse or common-law spouse, but it can also be your children. Whenever it is possible to transfer income to a person in a lower tax bracket, it should be done.
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The strategy works by having people set up partnerships that invest in state conservation credits. The credits are eventually used up and a K-1 is distributed to the partners who then go ahead and take credits on your personal revisit. The IRS is arguing that there's really no legitimate business purpose for your partnership, which makes the strategy fraudulent. Offshore Strategies - A traditional area of angst for the IRS, offshore strategies continue to be closely watched.
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