I guess Obama really dd pay for my gas

[statman]

http://www.irs.gov/individuals/artic...=96196,00.html

that is what I used. Enter the hsa, 401k, home interest, student loan interest, taxes on the home, medical expenses, and lots of kids and I don't have to pay taxes. It isn't going to matter for a few years, as I don't make that much money.

Enjoy taking education expense deduction this year - on half a year's real salary. Next year you'll make too much to get it.

That's the really ironic thing about the student loan interest deduction. Those who rack-up big student loan debt and have big incomes as a result, don't qualify for the deduction.

The story of my financial life. My wife and I have been paying AMT since the year we both finished grad school. And since AMT rates weren't affected, the 'benefit' we saw from "The Bush Tax Cut" was exactly $0...

[mUUser]

the meaning of the Republican message is 'Shift taxes to the poor! Reduce services to the poor!' At least the Flat Taxers have the cajones to say it pretty much like it is. The Republican party is a party that looks after the interests of the rich.

YOU LIE!

Sincerely,

Joe Wilson

[Moliere]

I just did my taxes...wow, I'm getting a sizeable 5 figure refund (I only paid a little over $1000 due to it being a signon bonus and unavoidable tax).

I worked out my tax forecast and I don't start paying taxe until I make in the mid $90,000 range. So, this begs the question, who in this country is actually paying taxes? I mean, I'm a pretty average Joe and I don't have to pay until $95,000?

I'm in the exact same boat as you. I got a 33% increase in income this year and figured I'd end up paying something (I haven't paid actual federal income taxes since I graduated). I did my taxes over the weekend and alas I still am getting $1,000 in refundable tax credits from the federal government. I have to make more than $100K in my situation to actually pay taxes. It helps that I own a home, have 5 kids, pay tithing, etc.

Let me reiterate, I have to make more than $100K to actually pay federal income taxes. VIVA OBAMA!

[wuapinmon]

cowboy, without any acrimony, what is the source for your stats?

[cowboy]

cowboy, without any acrimony, what is the source for your stats?

No offense taken. They are startling statistics, and I would have cited sources but didn't have time.

...Personal income taxes, including social security tax, accounts for around 80% of federal tax revenues, and they break down to around $7,000 for every man, woman, and child in the US...

This comes from Treasury's home page. Specifically, it is extracted from Table 2.1 - Receipts by Source: 1934-2014, and it is broken out per capita assuming a US population of 308 million. The actual number is somewhere between $6,500 and $7,000 per capita, depending on the forecast you use (ie, CBO, Treasury, BLS.)

Using the $3.7 trillion budget submitted by the President today, the total projected spending per capita is $11,776. Sources, per capita for these outlays break down as follows:

Individual Income Tax: $3,519
FICA: $3,147
Corporate Income Tax: $599
Excise Tax: $250
Other Tax: $292
Debt (Deficit): $4,212

And my argument is that the poor don't have a tax burden. Over half of all personal income tax revenues come from those with an adjusted gross income over $200k. Another 20% comes from those with an adjusted gross between $100 and $200k, and a whopping 80% of all income taxes come from the $75k tax bracket and up. AGI's under $50k, approximately the median household income, pay less than 10% of the total income taxes collected.

These are SOI data from the IRS. Specifically, they are from Table 3.5 Returns with Modified Taxable Income [1]: Tax Generated, by Rate

Interestingly, using these numbers, the marginal tax rate would have to be 95% for all incomes over $100,000 to close the 2010 deficit gap .

[statman]

Let me reiterate, I have to make more than $100K to actually pay federal income taxes. VIVA OBAMA!

You need to double check - Alternate Minimum Tax kicks in at $70,950.

AMT in a nutshell - you have to pay a minimum of 26% (28% if you make over $150K) on everything you make above $70,950 - regardless of the total other tax deductions you may have. Basically, if you make $100,000, you're still going to have to pay, at a minimum, 26% of $29,050 in Federal Income Taxes. If the standard tax table, with all your deductions, puts you at an adjusted income that says you have to pay under $7,553 in tax (on $100K base income), you're probably subject to AMT, and whether you know it or not (or whether it's fair or not), you're underpaying your federal income taxes...

Note - If this is misreading of the AMT rules, someone please tell me. Like I said above, I've been paying AMT for the last 12 years - because Turbo Tax says that's what I should be paying, and because after looking into it a couple times, I concluded the same thing.

Also Note - these assumptions are based on viewing the $100K as salary, where there's no significant business expense write-offs possible. If you're on your own and 'making $100K,' that's a lot different than drawing a paycheck and making $100K. The guy working on his own has a lot more options & alternatives than the guy drawing a salary...

[mUUser]

cowboy, without any acrimony, what is the source for your stats?

Another good source for tax info is The Tax Foundation founded during the Great Depression.

http://taxfoundation.org/


Here, you'll learn that...

In 1988 Reagan's last year, the top 5% earned 29% AGI and paid 46% of income taxes.

In 1992, Bush's last year, the top 5% earned 28% AGI and paid 46% AGI of income taxes

In 2000, Clinton's last year, the top 5% earned 35% AGI and paid 56% of income taxes

in 2007, the top 5% of income earners, earn 38% of AGI and pay 61% of income taxes

...and there's lots of other interesting stuff.

[Moliere]

You need to double check - Alternate Minimum Tax kicks in at $70,950.

AMT in a nutshell - you have to pay a minimum of 26% (28% if you make over $150K) on everything you make above $70,950 - regardless of the total other tax deductions you may have. Basically, if you make $100,000, you're still going to have to pay, at a minimum, 26% of $29,050 in Federal Income Taxes. If the standard tax table, with all your deductions, puts you at an adjusted income that says you have to pay under $7,553 in tax (on $100K base income), you're probably subject to AMT, and whether you know it or not (or whether it's fair or not), you're underpaying your federal income taxes...

Note - If this is misreading of the AMT rules, someone please tell me. Like I said above, I've been paying AMT for the last 12 years - because Turbo Tax says that's what I should be paying, and because after looking into it a couple times, I concluded the same thing.

Also Note - these assumptions are based on viewing the $100K as salary, where there's no significant business expense write-offs possible. If you're on your own and 'making $100K,' that's a lot different than drawing a paycheck and making $100K. The guy working on his own has a lot more options & alternatives than the guy drawing a salary...

Well, I meant $100K in gross income. I didn't mean that to be my AGI. I also use Turbo Tax and it says I don't have to pay it. At $100K in gross income I'd be on the cusp of paying it but haven't crossed that line yet. I'm also a CPA so it pays to know the rules, which is another reason why the tax rules are flawed since the rich can afford to pay people to help them avoid taxes.

[byu71]

Well, I meant $100K in gross income. I didn't mean that to be my AGI. I also use Turbo Tax and it says I don't have to pay it. At $100K in gross income I'd be on the cusp of paying it but haven't crossed that line yet. I'm also a CPA so it pays to know the rules, which is another reason why the tax rules are flawed since the rich can afford to pay people to help them avoid taxes.

What. How can a CPA help you avoid paying taxes you actually owe.

Are you saying if I have a legitimate deduction and don't take it, I am a better human being because I don't "avoid" paying taxes.

How do your clients feel about your attitude toward your helping them to pay only what they legitimately owe.

[mUUser]

the tax rules are flawed since the rich can afford to pay people to help them avoid taxes.

Did you not see my post directly above yours?

[Moliere]

What. How can a CPA help you avoid paying taxes you actually owe.

Are you saying if I have a legitimate deduction and don't take it, I am a better human being because I don't "avoid" paying taxes.

How do your clients feel about your attitude toward your helping them to pay only what they legitimately owe.

I'm not sure you understood me correctly. Yes, there is an amount of taxes that you legitimately owe, but there are ways you can structure your life to avoid paying more taxes than you have to.

For instance, if you were going to buy a home, you should try and do it before the government subsidy timeframe ends. Not doing this will lead to you not being able to claim that homebuyer credit.

It's a term called "tax avoidance" and it entails setting up transactions so that the structure and timing gives you biggest benefit from a tax perspective.

Also, I am not a tax accountant, although I've had enough classes and continuing education to understand personal and corporate taxation.

[Moliere]

Did you not see my post directly above yours?

Ha! Well, I guess I should have put the word "relatively" into my statement. I fully support a progressive tax system but the federal income tax system is broken and should be done away with. There are other ways to accomplish a progressive tax system, but they will never happen, at least not in my lifetime.

[byu71]

[QUOTE=Eddie Jones;279872]I'm not sure you understood me correctly. Yes, there is an amount of taxes that you legitimately owe, but there are ways you can structure your life to avoid paying more taxes than you have to.

For instance, if you were going to buy a home, you should try and do it before the government subsidy timeframe ends. Not doing this will lead to you not being able to claim that homebuyer credit.

It's a term called "tax avoidance" and it entails setting up transactions so that the structure and timing gives you biggest benefit from a tax perspective.

Also, I am not a tax accountant, although I've had enough classes and continuing education to understand personal and corporate taxation.[/QUOTE


Tax avoidance is a good thing. Some people avoid taxes by not making enough money to be taxed.

There isn't really a heck of a lot you can do to avoid paying taxes unless you just plain earn less.

CPA's used to do a lot of "tax planning", I don't think there is much you can do in that regard anymore. Maybe tax timing. Shift when you pay the taxes from one period to another. I am talking income taxes here.

[mUUser]

Ha! Well, I guess I should have put the word "relatively" into my statement. I fully support a progressive tax system but the federal income tax system is broken and should be done away with. There are other ways to accomplish a progressive tax system, but they will never happen, at least not in my lifetime.

I get the sense you haven't fully thought this one through and got caught up in the popular hyperbole of the day that the rich are somehow, avoiding paying their fair share of taxes. No?

[Moliere]

Tax avoidance is a good thing. Some people avoid taxes by not making enough money to be taxed.

There isn't really a heck of a lot you can do to avoid paying taxes unless you just plain earn less.

CPA's used to do a lot of "tax planning", I don't think there is much you can do in that regard anymore. Maybe tax timing. Shift when you pay the taxes from one period to another. I am talking income taxes here.

Well, some people don't know about IRAs, and if they do they misuse them. I would be dumb to invest in a traditional IRA this year since my ETR is basically 0%. A roth IRA is better for me since I will likely have no dependents and be in a higher tax bracket when I retire.

The value comes in where to put your money and when.

Also, many people overpay taxes because they simply don't take deductions they should. That's what happens when you take an incredibly complex income tax code and you force engineers, doctors, teachers, etc. to comply with it.

For instance, I once reviewed the tax return of a friend who is a teacher. He forgot to take the child tax credit, which back then was $600. I basically saved him $600 when I caught that one. He was trying to save money by doing his own taxes, but often times that results in losing money in missed deductions. TurboTax is a good starting point, but you should know the basic tax rules if you are going to use it.