I am sorry but if your making $35,000 or so and still paying taxes (not getting it back in April) then you need a new accountant. You don't have to cheat to get your money back either.
Well, of course, virtually everyone pays *some* kind of tax. You'd pretty much have to be a shut-in vegetable or a living-on-the-land mountain man not to.
And the number estimated to pay some federal tax is about 82 percent.
The 47 percent number is the number estimated to pay no *federal* income tax.
But it should be noted that it's not clear that that's what Romney was talking about. He seemed to indicate that he was talking about 47 percent of Americans relying on the government. That's a somewhat different set of people, and I don't know how accurate that number is.
Added comment following the posting by some others here:
(1) obviously those who pay "no tax" consists of a variety of people... such people would include those living on social security income, supplemental security income (SSI), Section 8 housing (and other government-sponsored housing), food stamps and cash assistance. With such income there is no requrement to file a Federal income tax return.
(2) whether a person is required to file a Federal income tax return depends on a number of factors. Those factors include: whether the income received is taxable and greater than the standard deduction (referring to the filing status), whether the person is a dependent of another taxpayer, and whether the person has self employment income (minimum of $400 net). Being "required" to file is different than "may need" to file (in the latter case one can only get tax withheld returned if they file a tax return even when the situation itself does not "require" filing).
(3) the goal of every personal income tax return is, quite simply, to take advantage of every deduction and credit possible. One must, of course, qualify in taking them... A lot of people do not realize it but the Congress has structured the Federal tax system around these issues/factors: marital status; kids; business.
(4) even those who do "not pay tax" actually do pay tax. If a person is an employee and receives a Form W-2 their wages are subject to the employee's share of FICA (social security tax) and medicare (a few exceptions apply). These taxes are not deductible - doesn't matter what the income bracket a person is in those two taxes are not deductible on a personal tax return. Because both taxes are matched (in most cases) by the employer's share of FICA/medicare the employer does get to deduct the expenses on whatever business tax return the business files.
(5) we must remember that in far too many cases we tend only to think in terms of the Federal tax system in this country. As complex and as difficult as it is there are numerous other taxes which we have to fool with in this country, for example:
(a) state income tax,
(b) city income tax (in Michigan there are some 25 or so cities with income tax laws on the books, some states mandate that every city within a state will take a cut - New York, PA and Ohio come to mind),
(c) county and school tax,
(d) property tax (often referred to as "real estate" taxes),
(e) personal property tax (this one has been around since the turn of the century and applies to businesses who must file about an 8-page declaration on the property sitting at a place of business which, in turn, generates a "taxable value" against which the business is assessed tax),
(f) gift tax and generation skipping tax (BST),
(g) business taxes (e. g., SUTA, FUTA),
(h) estate and trust taxes,
(i) various fiduciary taxes,
(j) severance taxes,
(k) sales taxes (city, county and state)...
(l) and the list goes on...
Anyone who thinks taxes are simple is fooling themselves. Reminds me of anyone who, facing a legal challenge, acts as his own lawyer - not a wise move...
For me, if there is a way to make taxes work for people I am all for it.
The Congress, the individual state legislatures and the other various tax authorities wrote the laws. To change the system we must change the existing law - that will only happen when the people in these United States say "enough is enough already!" I do not see that happening. There are too many vested interests in retaining the tax system as it is and it is too difficult to change a system that is so embedded in our financial structures.
Erly, something like 1/3 of the 47%ers are people who have extremely low or no incomes, or lower income elderly. These are mostly folks who would fall into the "you can't get blood from a turnip" category or in the case of the elderly, people whom no politician would dare go after.
A few thousand of the 47%ers are the ultra rich, but most are the working poor who have multiple kids. Do you propose doing away with the child tax credit?
I certainly have no problem with the concept of a fairer tax code, but I don't know that you need a flat tax to do it. Doing away with a bunch of loopholes would work, but here's the political conundrum: Which ones?
Add: Another significant group of nontaxpayers are those who live/work on the cash economy. Good luck on getting them to pay much if any taxes.
Mr Tax Man how does one get over $100 million into a 401K plan? I just enjoy how those that are not doing all that well continue the mantra of those that are? Wake up people and realize you are never going to acheive what the 1%ers have by supporting their policies. Flat tax? Really? 15%? Please let's not think like Alice in Wonderland.
I'm right in the same boat as you are, guy. Unfortunately, the tax code in this country is set up to favor heterosexuals with kids (as well as the wealthy, of course). Us single moderate-income gay guys without kids pay more than our fair share as a result.
Anyone who thinks making $45k in this current economy is NOT apart of the "working poor" is deluding themselves. And whether folks legally "claim" someone else on their taxes or not, know this: Everyone who HAS a job is supporting a partner, a family member or members or friends who DOESN'T have one.
From what I understand, most of the "47%," or at least those who are lower income "working poor," get out of owing federal income tax mainly because of the child tax credit.
The others are mostly either very rich, very poor or elderly.
I make $40to $45k a year. Obviously I pay taxes pretty much ANYtime I purchase goods. Obviously, I pay state and federal taxes too, no choice in the matter because it comes directly out my paycheck, usually to the tune of $10k a year. So in short I'm being taxed when I MAKE money and I'm being taxed when I SPEND money. Now usually because I only claim myself I get about a $1000 back come January [you don't think I'm actually going to wait until tax time to get that money do you?!] But clearly I'm a idiot and need a "accountant". Because you just alluded that I should be getting back ALL my money. I know when I'm beaten. So here's your opportunity to school me. Teach me how to beat paying my fair share of taxes just like the 1% do. I'm all ears.
In connection with another recent blog it might be useful to know something about our tax code. Here goes with some statistics people may not know, generally:
(1) many do not know that there is a foreign earned income exclusion when a US citizen is a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year. The maximum amount of the exclusion is $95,100. [Section 911 of the IRC]
(2) The 1954 Code (later changed to "The Tax Reform Act of 1986") imposed a progressive tax with 24 income brackets applying to tax rates ranging from 20% to 91%. The marginal tax rate for a single individual based on taxable income follows:
up to $37,500 - 20%
up to $75,000 - 22%
up to $112,500 - 26%
up to $150,000 - 30%
up to $187,500 - 34%
up to $225,000 - 38%
up to $262,500 - 43%
up to $300,000 - 47%
up to $337,500 - 50%
up to $375,500 - 53%
up to $412,500 - 56%
up to $487,500 - 59%
up to $600,000 - 62%
up to $712,500 - 65%
up to $825,000 - 69%
up to $937,500 - 72%
up to $1,125,000 - 75%
up to $1,312,500 - 78%
up to $1,500,000 - 81%
up to $1,687,500 - 84%
up to $1,875,000 - 87%
up to $2,812,500 - 89%
up to $3,750,000 - 90%
over $3,750,000.01 - 91%
(3) The above figures are "marginal tax rates" - which, for most of us, does not apply - rather because of all the deductions and credits available our tax liability is reduced to what is called "the effective tax rate." [This is one good reason to find a tax preparer who knows his/her business!]
(4) Of course, we should recognize that there are many ways for people to "move money around" to escape tax. Those "with money" are better able to do that - by saying that I am NOT saying anything is being done illegally. It is just that the resources of those with higher incomes are such that they can create tax entities and thereby, under the law, protect their assets.
(5) It should be noted that it is not illegal for a US citizen to have a foreign bank account. It is however, illegal to have such accounts for the purpose of evading tax. A US citizen (or resident alien) is required to report "world wide income." Currently the IRS has a windfall coming through a Whistleblower whose insights into some people having accounts in Swiss bank accounts produced tremendous income to the government. The Whitleblower got something like 2 cents on the dollar of such recovered money (a tidy sum after having served some time in jail). Thus having money in the Cayman Islands is not illegal and suggests nothing (something Romney was accused of). Quite literally thousands of US citizens have foreign bank accounts.
And the number estimated to pay some federal tax is about 82 percent.
The 47 percent number is the number estimated to pay no *federal* income tax.
But it should be noted that it's not clear that that's what Romney was talking about. He seemed to indicate that he was talking about 47 percent of Americans relying on the government. That's a somewhat different set of people, and I don't know how accurate that number is.
(1) obviously those who pay "no tax" consists of a variety of people... such people would include those living on social security income, supplemental security income (SSI), Section 8 housing (and other government-sponsored housing), food stamps and cash assistance. With such income there is no requrement to file a Federal income tax return.
(2) whether a person is required to file a Federal income tax return depends on a number of factors. Those factors include: whether the income received is taxable and greater than the standard deduction (referring to the filing status), whether the person is a dependent of another taxpayer, and whether the person has self employment income (minimum of $400 net). Being "required" to file is different than "may need" to file (in the latter case one can only get tax withheld returned if they file a tax return even when the situation itself does not "require" filing).
(3) the goal of every personal income tax return is, quite simply, to take advantage of every deduction and credit possible. One must, of course, qualify in taking them... A lot of people do not realize it but the Congress has structured the Federal tax system around these issues/factors: marital status; kids; business.
(4) even those who do "not pay tax" actually do pay tax. If a person is an employee and receives a Form W-2 their wages are subject to the employee's share of FICA (social security tax) and medicare (a few exceptions apply). These taxes are not deductible - doesn't matter what the income bracket a person is in those two taxes are not deductible on a personal tax return. Because both taxes are matched (in most cases) by the employer's share of FICA/medicare the employer does get to deduct the expenses on whatever business tax return the business files.
(5) we must remember that in far too many cases we tend only to think in terms of the Federal tax system in this country. As complex and as difficult as it is there are numerous other taxes which we have to fool with in this country, for example:
(a) state income tax,
(b) city income tax (in Michigan there are some 25 or so cities with income tax laws on the books, some states mandate that every city within a state will take a cut - New York, PA and Ohio come to mind),
(c) county and school tax,
(d) property tax (often referred to as "real estate" taxes),
(e) personal property tax (this one has been around since the turn of the century and applies to businesses who must file about an 8-page declaration on the property sitting at a place of business which, in turn, generates a "taxable value" against which the business is assessed tax),
(f) gift tax and generation skipping tax (BST),
(g) business taxes (e. g., SUTA, FUTA),
(h) estate and trust taxes,
(i) various fiduciary taxes,
(j) severance taxes,
(k) sales taxes (city, county and state)...
(l) and the list goes on...
Anyone who thinks taxes are simple is fooling themselves. Reminds me of anyone who, facing a legal challenge, acts as his own lawyer - not a wise move...
For me, if there is a way to make taxes work for people I am all for it.
The Congress, the individual state legislatures and the other various tax authorities wrote the laws. To change the system we must change the existing law - that will only happen when the people in these United States say "enough is enough already!" I do not see that happening. There are too many vested interests in retaining the tax system as it is and it is too difficult to change a system that is so embedded in our financial structures.
FWIIW
A few thousand of the 47%ers are the ultra rich, but most are the working poor who have multiple kids. Do you propose doing away with the child tax credit?
I certainly have no problem with the concept of a fairer tax code, but I don't know that you need a flat tax to do it. Doing away with a bunch of loopholes would work, but here's the political conundrum: Which ones?
Add: Another significant group of nontaxpayers are those who live/work on the cash economy. Good luck on getting them to pay much if any taxes.
The others are mostly either very rich, very poor or elderly.
In connection with another recent blog it might be useful to know something about our tax code. Here goes with some statistics people may not know, generally:
(1) many do not know that there is a foreign earned income exclusion when a US citizen is a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year. The maximum amount of the exclusion is $95,100. [Section 911 of the IRC]
(2) The 1954 Code (later changed to "The Tax Reform Act of 1986") imposed a progressive tax with 24 income brackets applying to tax rates ranging from 20% to 91%. The marginal tax rate for a single individual based on taxable income follows:
up to $37,500 - 20%
up to $75,000 - 22%
up to $112,500 - 26%
up to $150,000 - 30%
up to $187,500 - 34%
up to $225,000 - 38%
up to $262,500 - 43%
up to $300,000 - 47%
up to $337,500 - 50%
up to $375,500 - 53%
up to $412,500 - 56%
up to $487,500 - 59%
up to $600,000 - 62%
up to $712,500 - 65%
up to $825,000 - 69%
up to $937,500 - 72%
up to $1,125,000 - 75%
up to $1,312,500 - 78%
up to $1,500,000 - 81%
up to $1,687,500 - 84%
up to $1,875,000 - 87%
up to $2,812,500 - 89%
up to $3,750,000 - 90%
over $3,750,000.01 - 91%
(3) The above figures are "marginal tax rates" - which, for most of us, does not apply - rather because of all the deductions and credits available our tax liability is reduced to what is called "the effective tax rate." [This is one good reason to find a tax preparer who knows his/her business!]
(4) Of course, we should recognize that there are many ways for people to "move money around" to escape tax. Those "with money" are better able to do that - by saying that I am NOT saying anything is being done illegally. It is just that the resources of those with higher incomes are such that they can create tax entities and thereby, under the law, protect their assets.
(5) It should be noted that it is not illegal for a US citizen to have a foreign bank account. It is however, illegal to have such accounts for the purpose of evading tax. A US citizen (or resident alien) is required to report "world wide income." Currently the IRS has a windfall coming through a Whistleblower whose insights into some people having accounts in Swiss bank accounts produced tremendous income to the government. The Whitleblower got something like 2 cents on the dollar of such recovered money (a tidy sum after having served some time in jail). Thus having money in the Cayman Islands is not illegal and suggests nothing (something Romney was accused of). Quite literally thousands of US citizens have foreign bank accounts.
FWIIW