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How A Family Of Four Making $50k Can Pay Zero Income Taxes

8 April 2010 5 Comments

Interesting article out recently on the tax data coming in for this year.  The article discusses how 50% of American households will pay zero federal income taxes this year.  Depending on your point of view, this might be a good or bad thing.

The most interesting part of the article is at the end describing exactly how a family of four making $50,000 can pay zero income taxes.

The family was entitled to a standard deduction of $11,400 and four personal exemptions of $3,650 apiece, leaving a taxable income of $24,000. The federal income tax on $24,000 is $2,769.

With two children younger than 17, the family qualified for two $1,000 child tax credits. Its Making Work Pay credit was $800 because the parents were married filing jointly.

The $2,800 in credits exceeds the $2,769 in taxes, so the family makes a $31 profit from the federal income tax. That ought to take the sting out of April 15.

What an odd and ridiculous tax code we have.  Why don’t we just go to a freaking flat tax for crying out loud?

5 Comments »

  • Wingtipwalker said:

    …flat tax? That would be too easy. Think of all the lost jobs and tax revenue from no longer needing H&R Block or Turbotax….think of the friendly neighborhood CPA who is no longer needed to decipher and arcane tax code…

    Let's not forget the political class (could be Republican or Democrat depending on who is in power at the time) who needs gimmicks in the tax code to point the finger at the other side…or worse, buy votes. I mean, it's tempting to support the party that saves me $2700 and even sends me $31 to go buy an ice cream for the family.

    I hope my sarcasm and distrust of the government comes through here, but also does not land me on some sort of homeland security watch list…

  • bibledebt said:

    It is called "marching onto socialism"! A flat tax is a great idea! Unfortunately, it is highly likely that it won't pass anytime soon. I guess I will have to start having more kids here soon (actually I have my first on the way in June) so I can reduce my taxable income.

    Interesting article. Thanks for sharing! Keep up the great work!

  • 20smoney said:

    Thanks for the comment and congrats on the upcoming baby. You're in for a wild, but incredible ride 🙂 I'm 1.5 years into the journey myself.

  • Annita Appelman said:

    Virtually all of whatever you mention is supprisingly accurate and it makes me ponder the reason why I had not looked at this with this light before. This particular piece truly did turn the light on for me personally as far as this topic goes. But at this time there is one factor I am not too comfortable with and while I try to reconcile that with the actual central idea of the issue, allow me see what all the rest of your subscribers have to say.Very well done.

  • Joeff said:

    If you really think Warren Buffett's secy should pay the same %age as her boss then yes the flat tax is definitely the way to go.