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S is for SPLIT. Income splitting is a strategy that involves transferring a portion of greenbacks from someone is actually in a high tax bracket to a person who is within a lower tax segment. It may even be possible to reduce the tax on the transferred income to zero if this person, doesn't possess any other taxable income. Normally, the other person is either your spouse or common-law spouse, but it can also be your children. Whenever it is possible to transfer income to a person in a lower tax bracket, it should be done. If profitable between tax rates is 20% then your family will save $200 for every $1,000 transferred towards "lower rate" relation.

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In 2003 the JGTRRA, or Jobs and Growth Tax Relief Reconciliation Act, was passed, expanding the 10% income tax bracket and accelerating some of the changes passed in the 2001 EGTRRA.

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