Splitting income between you and your partner

[rowan]

Hi,

I dunno about the rest of the world, but Australia has a tiered tax system, where you pay a higher tax as you earn more:

$0 - $6000 is 0%
$6001 - $20000 is 17%
$20001 - $50000 is 30%
$50001 - $60000 is 42%
$60000+ is 47%

So if your taxable income is $21,000 you're taxed 0% of $6,000 plus 17% of $14,000 plus 30% of $1,000.

If I make $100,000 and my partner makes $20,000, I pay $34,380 in tax and she pays $2,380. The total tax for both of us is $36,760. Now, if we split that down the middle instead, with $60k each, we only pay a total of $31,160.

I figure instead of giving her money from my bank account (which is MY taxable income), why not just change some sponsors to her name, so she can have that as extra income, with the reduction in overall tax as a benefit. Is anyone doing this?

BTW: these amounts are ficticious. I wish I was earning $100k a year. ;)

Cheers.

[Marcin]

Originally posted by rowan
Hi,

I dunno about the rest of the world, but Australia has a tiered tax system, where you pay a higher tax as you earn more:...


Here in Poland we have similar tax system. Work more, harder and you pay more:rolleyes:

[Ride]

Do what ever you can to save money. :D

I am not familiar with your tax system, but I would just try to save as much in taxes as possible.

Ride

[wratom]

I'm not an accountant, nor from Australia, but I would think you could pay her from your business income as an employee. (Even if the business is run out of your personal name.)

You should be able to write it off as you would for your other business expenses (content, hosting, traffic, etc..). She would then report the money you pay her as income.

I would definately get an accoutant though, you might pay a couple hundred bucks, but chances are they will save you double that in deductions you might have otherwise missed.

[Ravo]

rowan,

We have the same tax regime in Canada.

It's easiest if you incorporate, then hire you and your partner as employees. You can split income this way quite easily. There is one caveat though; if you are audited you must prove that your partner actually did something to earn the money, and the salary was equal to th work done. The tax agencies are on to this type of "avoidance" :)

[rowan]

Originally posted by Ravo
rowan,

We have the same tax regime in Canada.

It's easiest if you incorporate, then hire you and your partner as employees. You can split income this way quite easily. There is one caveat though; if you are audited you must prove that your partner actually did something to earn the money, and the salary was equal to th work done. The tax agencies are on to this type of "avoidance" :)

I guess 'sex' being her job description would be illegal prostitution... damn. :D

[Sexzity]

Originally posted by rowan
Hi,

I dunno about the rest of the world, but Australia has a tiered tax system, where you pay a higher tax as you earn more:

$0 - $6000 is 0%
$6001 - $20000 is 17%
$20001 - $50000 is 30%
$50001 - $60000 is 42%
$60000+ is 47%

So if your taxable income is $21,000 you're taxed 0% of $6,000 plus 17% of $14,000 plus 30% of $1,000.

If I make $100,000 and my partner makes $20,000, I pay $34,380 in tax and she pays $2,380. The total tax for both of us is $36,760. Now, if we split that down the middle instead, with $60k each, we only pay a total of $31,160.

I figure instead of giving her money from my bank account (which is MY taxable income), why not just change some sponsors to her name, so she can have that as extra income, with the reduction in overall tax as a benefit. Is anyone doing this?

BTW: these amounts are ficticious. I wish I was earning $100k a year. ;)

Cheers.

In Denmark we have a tax system like that, but after 40k$=270000 kr. we pay 1%+9%+60%
But we can never come over 70% in taxes, so that is great:rolleyes:

[EMPTYBRAIN]

Just give some checks to friend and they give you money in return.
Some people need "officialize" ther money.:cool:

[StwoF]

Payroll check to yourself and the employee from your business :D

[The Chosen]

damn.. here if you make 6k$ you would pay atleast 50%, maybe even 60%

[TeenGodFather]

My gf makes around $1k month working at a grocery store and she has to pay like 24% tax... The maximum tax in Finland is 60%.
I won't tell you mine :p

[Breaker]

Same here.. atleast 50% in tax.. from $800 i think.. sucks having your own company

[bigm]

what is the tax system in usa?
anyone knows?

[a1ka1ine]

Originally posted by rowan


I guess 'sex' being her job description would be illegal prostitution... damn. :D


mwahhahaha

that exactly went thru my mind too!

[a1ka1ine]

Originally posted by Breaker
Same here.. atleast 50% in tax.. from $800 i think.. sucks having your own company

40% wage tax in the uk (tiered) ........ not sure how much corporation tax is.

[sinno]

for me those tiers are like punishment..... btw. I've heard in Russia they have 13% tax no matter how much you earn.... which is pretty cool idea

[AgentCash]

Originally posted by bigm
what is the tax system in usa?
anyone knows?

It sucks. :D Not 60% and here the more money you have the easier it is to get out of paying taxes. For example, last I heard if you're a lowly minimum wage employee at McDonalds, you pay more tax than Microsoft.

Individual Tax Tables
http://www.irs.gov/pub/irs-pdf/i1040.pdf

Business Tax Tables
http://www.irs.gov/pub/irs-pdf/i1120_ay.pdf

In those two files towards the middle it lists the income taxes for the various income levels. Those aren't the only taxes we pay though. There are also state income taxes, sales tax, use tax, etc. etc. etc.

[TeenGodFather]

As soon as I graduate (if I graduate) from my school I'm gonna get the fuck out of finland. To some nice warm tax-paradise. :)
It really doesn't matter from where I do this line of work, now does it? :)