Is it time to join the 47% of Americans who pay no taxes?

[citrine]

Who said this? Everyone!? I think it is more accurate to say that some of us don't think we should pay for someone else's decision to become a parent.

Tax - Free Tax Tips and Free Tax Calculators - H&R Block®

BTW, a single with $30,000 wage, no dependents will pay ~ $2,280 in FIT.

MFJ $60,000 total, with two kids will pay $1,465 in FIT.

How do you feel about a couple making 2x more than you, paying less in taxes? Shouldn't they contribute their 'fair share'? Those kids are probably using more govt resources than no kids.

-ERD50

I think of it as investing in the future of our country and our world. I have been blessed in life and don't think in terms of "me" vs. "them". My salary of 30K is for one person whereas the family has multiple individuals. What I don't understand is that people who make a LOT of money think that they should be able to bypass taxation. I think that attitude is going to be the ruin of our world. Maybe, I am alone in thinking that we should all try to help each other instead of hoarding our individual assets.

 

[youbet]

I think the more non-voters the better. I would prefer one voter only- me. TV crews would follow me to the polls, and Brian Williams would interview me to find out who I chose. And can you imagine the payola?

Ha

Here in Chicago, we have payola for everyone....... Or at least for everyone who votes the way the ONE PERON tell 'em to!

 

[scrabbler1]

I think the more non-voters the better. I would prefer one voter only- me. TV crews would follow me to the polls, and Brian Williams would interview me to find out who I chose. And can you imagine the payola?

Ha

What you wrote reminded me of the man (played by Kevin Costner) in the 2008 movie, "Swing Vote" in which one man's vote did decide the presidency. The media and the candidates followed him around for days until he cast his actual vote.

 

[ERD50]

I think of it as investing in the future of our country and our world. I have been blessed in life and don't think in terms of "me" vs. "them".

I still don't see why those with kids should be paying less taxes to invest in the same future. That's what I'm not getting.

My salary of 30K is for one person whereas the family has multiple individuals.

And multiple $30,000 incomes in my example.

Hey, what if I want to have some expensive hobby, that costs money too. Some hobbies even benefit society. So I can pay less tax too? It costs me more to live than you, due to my hobby. Hobbies are optional, and kids are optional. Remember, I do have three kids, this isn't a ' don't have kids' line, this is a 'take responsibility for your choices' line.

What I don't understand is that people who make a LOT of money think that they should be able to bypass taxation. I think that attitude is going to be the ruin of our world.

Who are these people you refer to? All people who make a LOT of money? Posters seem to keep making up these straw-man groups to knock down in some attempt to make their points sound valid.

I think that the vast majority of people, even those who make a lot of money, support a 'progressive' tax system. Yes, everyone will try to get their tax bill to the legal minimum, some will even break the law to do it, like Timothy Geithner. I am not aware of anyone actually promoting a general policy that says the rich should pay zero FIT. Got any links to a survey on this or something?

Do you skip the legal deductions that you can take?

And let's not forget that (The Tax Foundation - Summary of Latest Federal Individual Income Tax Data ):

In 2007, the top 1 percent of tax returns paid 40.4 percent of all federal individual income taxes

So it isn't happening. I know the response is usually 'they have most of the wealth, they should pay most of the taxes', but regardless, they ARE paying, and you are saying they think they shouldn't pay anything. They sure aren't very good at getting their wishes. I guess they are not as powerful a group as some make them out to be. Maybe they need to organize, The 'Fraternal Order of Rich People Who Want to Bypass Taxes'?

Maybe, I am alone in thinking that we should all try to help each other instead of hoarding our individual assets.

I don't think you are alone at all. Some of us want to see that help done with some semblance of 'fairness' and efficiency and effectiveness. And some of us think people should first take responsibility for themselves, and look for help second. I think the govt is currently providing too much 'help' to too many, and in the process I am certain that they are not providing enough those who really need it. I'd like to see better focus.

-ERD50

 

[youbet]

I still don't see why those with kids should be paying less taxes to invest in the same future. That's what I'm not getting.

So, what aspects of FIT that are unique to kids bother you? (Don't include personal exemptions as those are not unique to kids but rather apply to any dependent.)

I'm just not aware of these HUGE tax breaks for kids people keep whining about. Yes, low income parents probably have significantly lower taxes, as a percentage - trivial in absolute dollars, due to the child care credit if they use it. But for a middle class couple, say a couple engineers both working, the delta in taxes due to kid specific tax reductions seems minimal.

I'm guesing you're confusing the lower rate for MFJ vs single and the use of personal exemptions with savings from kids. Neither of those are kid specific.

 

[ziggy29]

So, what aspects of FIT that are unique to kids bother you? (Don't include personal exemptions as those are not unique to kids but rather to any dependent.)

Yes, but the vast majority of dependents are the taxpayer's children.

You know that couple who is in the news about once a year for having another kid, who have something like 18 kids now, and they keep coming? Between exemptions and "per child" tax credits, I once calculated that this couple can earn over $160,000 without owing one cent in federal income tax.

How people can think this is acceptable is beyond me, personally.

 

[haha]

You know that couple who is in the news about once a year for having another kid, who have something like 18 kids now, and they keep coming? Between exemptions and "per child" tax credits, I once calculated that this couple can earn over $160,000 without owing one cent in federal income tax.

How people can think this is acceptable is beyond me, personally.

Not only unacceptable, but extremely common.

 

[youbet]

Yes, but the vast majority of dependents are the taxpayer's children.

You know that couple who is in the news about once a year for having another kid, who have something like 18 kids now, and they keep coming? Between exemptions and "per child" tax credits, I once calculated that this couple can earn over $160,000 without owing one cent in federal income tax.

How people can think this is acceptable is beyond me, personally.

So, are you saying that the credits for dependents should be eliminated altogether or that credits for dependent adults (you take in your aging mother saving the state thousands annually in Medicaid and get a credit for her as a dependent) should be maintained and only credits for kids be eliminated?

How can you point out that few dependents are adults (relative to kids) and in the same breath give an example of a couple with 18 kids? Yeah, adult dependents are probably "rare" but not nearly as rare as having 18 kids.

Come on........

 

[ERD50]

I'm just not aware of these HUGE tax breaks for kids people keep whining about.

It started out with me commenting how low my own FIT has been, due to the various credits. Kids, dependent deductions, and edu credits were a big part of it for me. I have not run the numbers in the same year, but I guess these get phased out at higher incomes. I know that the previous year, when I triggered a big cap gain, deductions and credits got phased out very quickly, and my tax bill was up around 15% of AGI, and that seems more 'real world' to me. As much as I gripe about our govt, I do recognize that they need to collect taxes to do what needs to be done, and 15% of a fairly high income in that year does not seem out-of-line, ballpark-wise.

On principle, I just don't see why we should be subsidizing people like me who paid $24 in FIT in 2008 on ~ $84,000 AGI. I'd prefer to see safety net stuff applied where it is needed, and not just some broad-brush tax code.

And just to be clear, it is sort of an odd whining I'm doing, because I'm saying that I (and people in my situation) should have been paying more tax in that year.

-ERD50

 

[ziggy29]

So, are you saying that the credits for dependents should be eliminated altogether or that credits for dependent adults (you take in your aging mother saving the state thousands annually in Medicaid and get a credit for her as a dependent) should be maintained and only credits for kids be eliminated?

Another false dichotomy here -- maintaining the status quo or completely eliminating tax subsidies for children are not the only options.

 

[youbet]

Between exemptions and "per child" tax credits

Other than child care credits, which phase out with income, what "per child" tax credits are you referring to?

 

[youbet]

It started out with me commenting how low my own FIT has been, due to the various credits. Kids, dependent deductions, and edu credits were a big part of it for me. I have not run the numbers in the same year, but I guess these get phased out at higher incomes. I know that the previous year, when I triggered a big cap gain, deductions and credits got phased out very quickly, and my tax bill was up around 15% of AGI, and that seems more 'real world' to me. As much as I gripe about our govt, I do recognize that they need to collect taxes to do what needs to be done, and 15% of a fairly high income in that year does not seem out-of-line, ballpark-wise.

On principle, I just don't see why we should be subsidizing people like me who paid $24 in FIT in 2008 on ~ $84,000 AGI. I'd prefer to see safety net stuff applied where it is needed, and not just some broad-brush tax code.

And just to be clear, it is sort of an odd whining I'm doing, because I'm saying that I (and people in my situation) should have been paying more tax in that year.

-ERD50

You're still not mentioning kid specific tax breaks ERD50. I'm sitting here looking at my son's 1040 (I still have some hours to modify it for him). He has 3 rugrats: 4, 8 and 9. Other than a few paltry bux saved due to child care credits (most phased out), no kid specific savings. Thanks for mentioning the education credits, but due to the age of these kids, they don't apply. In fact, I don't think the education credits are kids specific at all. Right?

Have you gone back to the $30k single vs. $60k couple with kids example and removed the confounding caused by the non-kid specific savings due to filing MFJ? I think you're getting that confused with kid specific tax breaks.

Are you in favor of removing personal exemptions altogether.......... elderly dependents, handicapped adult dependents, etc?

 

[ziggy29]

Other than child care credits, which phase out with income, what "per child" tax credits are you referring to?

Well, I realized I made a math error in the $160K "no tax" calculation, it's actually a little over $120K since the "per child" tax credit phases out completely at over $130K, but here it is:

TurboTax® - Child Tax Credit

(my emphasis added below)

If you have children who are under age 17 at of the end of 2009, you can get a $1,000 tax credit per child on your tax return. A tax credit reduces your tax bill dollar-for-dollar, so three qualifying children, for example, can cut what you owe Uncle Sam by $3,000. The credit may be limited if your income exceeds the levels listed below.

And the credit does not affect the exemptions you take for dependents—worth $3,650 each in 2009. The child tax credit is in addition to those exemptions.

If you didn't know about this and you have dependent children, either you earn a lot of money or you need to file an amended return to get the credits refunded to you.

 

[youbet]

Another false dichotomy here -- maintaining the status quo or completely eliminating tax subsidies for children are not the only options.

Zig, please....... Not trying to be argumentative here. Just trying to understand all these HUGE tax savings my fellow posters are referring to. I'm sitting here looking at my son's return (in TurboTax) and his three rugrats haven't saved him much. A few bux, capped by the phase out, for child care expenses. I hate to press the send button if there is a nice, ripe, HUGE piece of low hanging fruit I'm missing.

You said most dependents were tax payer's children. OK, that seems intuitive so I wouldn't even bother lookin' up the numbers. I'm just wondering if you want to eliminate all personal exemptions or just kids as personal exemptions. It isn't that uncommon for folks to support another adult (elderly parent, handicapped sibbling, etc.) and I'm wondering if those would be eliminated too along with the kids.

 

[haha]

It isn't that uncommon for folks to support another adult (parent, handicapped sibbling, etc.) and I'm wondering if those would be eliminated too along with the kids.

No, just kids. Who needs the next generation anyway? Once the decision to be childfree is made, why not go all the way?

 

[youbet]

Well, I realized I made a math error in the $160K "no tax" calculation, it's actually a little over $120K since the "per child" tax credit phases out completely at over $130K, but here it is:

TurboTax® - Child Tax Credit

(my emphasis added below)



If you didn't know about this and you have dependent children, either you earn a lot of money or you need to file an amended return to get the credits refunded to you.

Thanks Zig.

OK on your calculation error...... understandable. I think more importantly, you should probably state the percentage of people who have 16 kids. Your example really doesn't emphasize that the case you're calculating would be extremely, extremely rare.

On the Child Tax Credit...... yeah, I'm up on that one. Unfortunately, it phases out for my son. They're middle class, a couple of engineers, and earn over the $110k limit. In fact, I think two engineers from decent schools would start at more than that right out of university.

Also, the Child Tax Credit is not unique to kids.

you can also claim the credit for siblings, step-siblings and half-siblings that live with you.

Before you say it, however, I'm sure kids would be the bulk of it.

 

[youbet]

No, just kids. Who needs the next generation anyway? Once the decision to be childfree is made, why not go all the way?

Errrrrr....... Ahhhhhhh....... Hmmmmm.......

Ya, sure, why not?

 

[ziggy29]

No, just kids. Who needs the next generation anyway? Once the decision to be childfree is made, why not go all the way?

"May We Live Long and Die Out":

VHEMT

 

[audreyh1]

On the Child Tax Credit...... yeah, I'm up on that one. Unfortunately, it phases out for my son. They're middle class, a couple of engineers, and earn over the $110k limit. In fact, I think two engineers from decent schools would start at more than that right out of university.

Well, there you go. Your son and his wife make too much money to get the some of the juicier tax breaks available for kids in families with slightly lower incomes.

In 2007, $113K AGI put a household in the top 10% of tax paying households.

Households with two degreed married professionals in high paying jobs are a minority in the tax paying population. Not many households start right out of university with that kind of salary, and there are a huge number of family households with only one or no university degree.

Audrey

 

[youbet]

Well, there you go. Your son and his wife make too much money to get the some of the juicier tax breaks available for kids in families with slightly lower incomes.

When you say "some of the jucier tax breaks"....... we're only talking about one, right? People keep BS'ing about all these breaks, but not calling them out. Well, Zig called out this one that we're discussing, but that's it so far.

A $1k credit per kid is what you meant by "HUGE?" BTW, they don't have to be your kids in the traditional family sense according to the TurboTax info Zig thoughtfully referenced in his post.

Help here Audrey. I'm trying to dip into some of this big bux kids-specific savings everyone is talkin' about before pressing the send button. You're just teasing.......

 

[audreyh1]

Looks like we had exemptions, edu credits, child care tax credits and child tax credits. There have been a couple of examples posted of households who end up paying very little or actually getting money back. One was ER50's example from an $84K household. The other was quoted example of a ~$50K family getting money back from the govt (see below).

There is the earned income tax credit which is also based on the number of children and is a big tax break for low-income households. For example, in 2009 there was a credit of up to $5,657 for 3 or more qualifying children in a joint married household making $48K or less. This is actually the main way so many households with children fall in the not paying FIT category. I think the $50K quoted example fell into this category.

I therefore retain my right to use the terms "HUGE" and "juicy" given that the deductions and CREDITS are large compared to what would otherwise be the tax liability in this income range, and more so for families with children than with those without.

Personally, I don't have a problem with it. That's the way our tax code is written, and the biggest way we address poverty in the US (rather than welfare), and I don't believe the tax code is deliberately abused by a large number of people opting to have a huge number of children to get the better of it. Of course there are exceptions, I just don't believe they are numerous enough to penalize all the other families with children.

Audrey

 

[youbet]

Looks like we had exemptions,

NOT kid specific. I bet you took yourself as an exemption Audrey. Although, at 50 yo you're just a kid at heart I guess.

edu credits,

not kid specific.

child care tax credits

unfortunately phases out for middle class folks.

and child tax credits.

Phases out. This is the one we just discussed.

There have been a couple of examples posted of households who end up paying very little or actually getting money back. One was ER50's example from an $84K household.

That was ERD50's personal situation at his house. It included tax reductions other than kid-specific. But his point that our tax code is written so that relatively well off folks pay little tax is a good one and tweaks the thought process.

I therefore retain my right to use the terms "HUGE" and "juicy" given that the deductions and CREDITS are large compared to what would otherwise be the tax liability in this income range, and more so for families with children than with those without.

Everything is relative. If you think it's "HUGE" then, by golly, it's "HUGE" to you!

I don't believe the tax code is deliberately abused by a large number of people opting to have a huge number of children to get the better of it.

I agree with that. In fact, strictly from anecdotal examples and conversations with friends, I believe that non-kid related tax cheating is a bigger issue. I know that those stories of folks getting tax breaks from 18 kids stir the emotions. But gosh, those folks must live in Texas with Zig. I don't know anyone with 18 kids here. But everyone seems to have their favorite story of how they enhance something on sched A, declare residence in a no-tax state but don't really live there, don't declare money made on Ebay, and blaaah, blaaah, blaaah. Maybe it's just who I hang around with, but nobody here is ever boasting of how they're saving tax money by having 18 kids.

Now, getting back to business, I'm here at DS's home baby sitting 3 rugrats, 1 dog, 1 cat, 1 hamster and 5 tropical fish (unless another one died ) while DS and DIL are vacationing. (Am I a good grandpa or what?!?!) I looked at his taxes before he left and was shocked to see his bill similar to mine. Similar incomes but he has the 3 rugrats and I've been an empty nester for many years. I told him I'd figure out what he did wrong before electronically filing and then drove them to the airport.

Here I am, can't find a penny of "kid-savings" beyond the small child care credit he already has here.

With all this talk of "HUGE" savings, etc., you guys haven't been much help at all. Got me all excited. I thought this would be low hanging fruit. But nooooo.......

Maybe I should suggest they go "full time" and avoid state income tax and real estate tax and just home school the kids?

Oh well. I also promised to tune up his mower. Maybe I better go focus on that. It's going to need a "HUGE" amount of tuning up!

 

[audreyh1]

[You left out the "juiciest" kid one - the earned income tax credit in your list - oh, I know, it doesn't apply to your son either - surprise!]

You can't find a lot of "kid savings" for your son because he and his wife make too much.

Just because a credit phases out above certain income levels, doesn't mean it's not "juicy" or "huge" for the lower income folks. It's deliberately designed to be that way.

You can alway opt to lower your income to qualify for more breaks and to pay less taxes overall. That option is available to everyone.

Audrey

 

[ziggy29]

With all this talk of "HUGE" savings, etc., you guys haven't been much help at all. Got me all excited. I thought this would be low hanging fruit. But nooooo.......

Maybe I should suggest they go "full time" and avoid state income tax and real estate tax and just home school the kids?

Oh well. I also promised to tune up his mower. Maybe I better go focus on that. It's going to need a "HUGE" amount of tuning up!

The credits were never designed to be HUGE for higher income taxpayers, though. But they can make a "huge" difference for less affluent families.

 

[youbet]

You left out the "juiciest" kid one - the earned income tax credit in your list -

That's not kid specific either. But I understand low income folks with dependents (kids or not) get more EIC than without dependents, everything else being equal.

You can't find a lot of "kid savings" for your son because he and his wife make too much.

I agree Audrey. But I do think in the interest of fair representation, folks calling out kids as "HUGE" tax savings should specify that they mean huge as a percentage, not necessarily an absolute number, as middle class folks have most of these benefits phase out. But I know what ya mean. It's relatively speaking "HUGE" and possibly a significant percentage of a lower income family's tax bill.

You can alway opt to lower your income qualify for more breaks and to pay less taxes overall. That option is available to everyone.

And that's certainly true. Not kid-specific, but true. Any of us who think we pay too much income tax can solve the problem by having less income.