What Is Income Splitting?
Income splitting is a type of tax advantage available to corporations which can ultimately reduce a family’s overall tax bracket, potentially saving you a substantial amount of money. This method of legal tax avoidance stems from a corporation’s ability to pay its shareholders in dividends, regardless of whether or not they have any active involvement in the running of the company.
If you are interested in learning more about how to set up a corporation, Texas Legal Entities may be able to help you. Contact us today by calling 512-472-2431.
Understanding Splitting
Income splitting is effectively used to redistribute money within a family through the use of a corporation. Because shareholders do not have to be involved in actively running or working for a corporation in order to draw dividends, spouses and children may be part of your corporation and therefore receive dividends from the business, allowing you to redistribute income legally. This can allow you to lower your tax bracket by increasing the income of your relatives.
The United States Supreme Court has supported the legal right of American citizens to reduce their tax burden. Income splitting can be one of the most effective ways to redistribute wealth throughout a family.
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If you are considering creating a corporation in order to take advantage of the benefits of income splitting, Texas Legal Entities may be able to help you. To discuss your particular situation with us in more detail, visit our website or contact us today by calling 512-472-2431.
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