# Interesting scenario, 91k gross but 0 tax



## Tornbysaber (Nov 25, 2012)

The link goes to this guy's (American) blog about how he is paying 0 tax on his 91k adjusted gross income from 2013. To be honest, I dont understand how it went from 71752 (line 43) taxable income to 0 tax owed (line 76).

Confusions aside..... can we Canadians do something like this ?

http://www.gocurrycracker.com/the-go-curry-cracker-2013-taxes/


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## Spudd (Oct 11, 2011)

He filed as "married filing jointly" which in the US is possible (in Canada not). Presumably, this is income splitting to the max. So each individual only made 45.5k. Even in Canada (well, depends on province), if your income is composed entirely of dividends, you would pay zero tax on an income of 45.5k. 

You can play with this calculator and see:
http://www.taxtips.ca/calculators/basic/basic-tax-calculator.htm


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## OptsyEagle (Nov 29, 2009)

and of course he didn't get away with paying no tax because the corporations he owned would have been paying tax on his behalf.


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## Just a Guy (Mar 27, 2012)

There are many ways to legally minimize taxes, even in Canada…but it usually won't result in more money in your pocket, rather you benefit from more services. For example (extremely simplified) if you hire an accountant, you may be able to deduct their fees from the income tax you pay. Instead of giving their fee to the government (tax) you give it to the accountant (so you're not "paying" tax). Either way, you didn't get the money, but the latter way, you didn't have to do your accounting yourself (so you get more free time?).

Of course, if you earn money from a paycheque, there aren't a lot of ways to minimize your taxes…the ways increase if you "benefit" society by investing or owning a business.

Even if you do minimize your taxes though, in realty, it usually only works out to deferring taxes…as when you die, everything is "disposed of" on the date of death which can lead to a large final tax bill...


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## Charlie (May 20, 2011)

He had: 

$7388 interest
$28,139 divs
$44,197 cap gains

plus an IRA/Roth shuffle that I don't understand.

If he filed in Canada and split with his wife, he'd have:

$3694 interest
$19415 taxable dividends (grossed up -- assume eligible)
$22098 capital gains

And a taxbill of $340 in BC using 2012 tax software. ($680 for both spouses). 

Not so much a fancy scheme as less taxed sources of income. (his US tax was $388 before a foreign tax credit which I've also ignored).

Spudd's right that you could do better in Canada if your income was all eligible dividends.


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## Charlie (May 20, 2011)

Further to Spudd's comment, in BC using 2012 rates a couple could earn $110K eligible divs ($55K each) and pay less than $1000 total tax. 

Their 'total income' per their tax returns would be $152K (which is the grossed up amount).


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## OptsyEagle (Nov 29, 2009)

and that is only because that couple already paid a significant amount of tax within the corporations that they owned.


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