When it comes to paying tax on income, composition matters


Did you know that capital gains and qualified dividends have their own (and more favorable) tax schedule?

Are you aware that capital gains and dividends under certain thresholds may not be taxable at all?

Here’s an example to illustrate the point: ¬†a married couple, filing jointly, with taxable income of $80, 000 in 2020 would owe federal taxes of $9205 if that income were considered “ordinary”. ¬†Alternatively, the same amount of income generated by dividends and capital gains (with no ordinary income in the mix) would carry no federal tax liability at all.

We believe the tax laws are incentives and can be used to achieve efficiencies.