Many dentists are taking advantage of a tax strategy of converting the regular dividends from their corporations into a capital gain generating huge savings.
To illustrate, the capital gains tax on $200,000 of income from the corporation is about $22,700, compared to a tax of $54,500 on dividend income. A tax saving of $31,800! If you double the income to $400,000, the dividend tax is $143,800 while the capital gains tax is $65,400. A saving of $78,400! As you can see in the table, the more you take, the more you save.
The capital gains method of removing funds allows you to reduce your personal taxes on funds you need for living expenses, make a lump sum payment on your mortgage, or finance the children’s education.
It is smart to plan your personal taxes for 2020 now. Take advantage of the capital gains strategy, before it disappears. Tax saving opportunities that good will not be around for long!
