Recent tax law changes mean that for the first time, in 2009, a family of four making $50,000 can pay no federal income tax at all.
Tax Year 2009
AGI = $50,000
Fed Income Tax = $6,665
Earned Income Credit = $0
SS = $3,100
Medicare = $725
Total Tax = $10,490
Effect Fed Rate = 20.98%
Tax Year 2010
AGI = $50,000
Fed Income Tax = $4900
Earned Income Credit = $0
SS = $3,100
Medicare = $725
Total Tax = $8,725
Effect Fed Rate = 17.45%
And I haven't even added in state taxes...
What you are reading is extremely deceptive and designed to be that way. It says that if you your total income is 50K, you may end up paying no fed income tax AFTER DEDUCTIONS AVAILABLE TO EVERYONE. You will still pay SS and Medicare, you will still pay state taxes and taxes paid for services, gas, etc...if you make 50K and have four kids you are just scraping by...in some geographies you are very poor.
Al
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