The three boxes of income tax.
For income tax purposes, assets and deductions are divided into three categories, these categories are also called boxes. Within each tax bracket, separate rates apply to the income being taxed. The boxes are:
Box 1: taxable income from work and home
In this box, income received from work or your house is taxed. Consider your DGA salary, other wages, profit from your business (as a freelancer), or other activities. Additionally, the imputed rental income from your primary residence is also included in box 1. The imputed rental income is added to your income to tax the benefits of owning your own home. Consider the savings on rental costs, the increase in property value, etc. In box 1, there are various tax benefits to be gained. Sometimes, it can also be more advantageous to distribute the profit from your business as a dividend rather than as salary. By outsourcing your income tax declaration to SFAA, you can benefit from these tax advantages!
Box 2: taxable income from substantial interest
Once you own at least 5% of the shares in a company and derive income from it, this is considered income from substantial interest. This income can arise from, for example, dividend payouts or profit from selling the shares you own. All these incomes fall under box 2. Also here, various fiscal benefits can be achieved. There are two tax brackets in box 2. In some cases, it may be advisable to defer dividend payouts to reduce tax liability. The experts at SFAA know everything about this. Once you want to outsource your income tax declaration to SFAA, they will assist you with that!
Box 3: taxable income from savings and investments
In box 3, you pay tax on income from savings and investments. Examples of this include stocks, bonds, savings, or a second house. However, there are various exemptions and exceptions in box 3. It is therefore important to be aware of these exemptions and exceptions.
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