I am using $50,000 because this is close to the average national income of the U.S. for a family of four.
Let's see:
If you qualify to file Married-Jointly in 2014, then the following income is not taxed:
$12,400 is the standard deduction (forget about needing mortgage interest deductions or real estate tax deductions, they may not get you over this threshold though everyone's state taxes and charitable contributions will affect your total deductions possible)
$15,800 is the exemption for four at $3,950 per exemption in 2014
Two child tax credits of $1,000 each is $2,000 off the top, so if you make another $20,000 (rough numbers), then your Federal tax on that $20,000 is offset ( dollar-for-dollar) by these child tax credits. These may expire in 2017 if not extended so keep your eyes wide open.
Well, we are over $48,000 of income with no Federal tax and we have not yet considered whether there are other credits that may apply:
(1) Any interest on a qualified student loan? That is a deduction that offsets income, too, in part.
(2) Did you save for your retirement in a 401k or even a ROTH? That may qualify for a saver's credit of a few hundred dollars.
(3) Oh, and yes, you may even qualify for the EIC (Earned Income Credit) too. Not much, but something.
Yes, a family of four making less than $50,000 most likely is not paying much, if any, Federal taxes. Now the states are sure to get a piece of the action but not the Federal government.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.