Taken together, these factors are about incomes that fall below the standard deduction and personal exemptions. The exemption for most Social Security benefits; and tax benefits aimed at low-income families and children account for almost 90 percent of the Americans who pay no federal income tax.
Why we pay taxes
In America, one of the biggest tax bites on our income is the federal income tax, though state and local taxes also take a substantial bite. There are property and sales taxes. Every time we fill up the gas tank we are paying a tax.
We pay so much in taxes that some have calculated a tax freedom day as the time during the year when our nation has theoretically earned the income necessary to have paid our taxes for the year. This date usually occurs in April.
Why do we pay taxes? Most would answer it’s to pay for government services including national defense, roads and bridges, fire and police protection, etc. Of course, taxes are also used to pay for things with which we might not personally agree such as wars and abortions or on unnecessary things many consider to be a complete waste of taxpayer dollars. Most recently, complaints and arguments were against bank and corporate bailouts.
Some even argue that we should not have to pay taxes, though the 16th Amendment to the United States Constitution has been in place since 1913. This amendment gave the congress the power to collect taxes on incomes.
We are entering into that almighty tax season. Everyone working has to pay taxes and in this day and age you can get help online. The website serves as an online headquarters for taxpayers looking for more information about the Ohio individual income tax. Below you will find answers for many common questions as well as resources to help you through filing season.
Taxpayers who dislike dealing with tax forms may prefer I-File. Their I-File wizard asks taxpayers a series of questions then compiles a state or school district income tax return based on those answers.
NOTE: The 2011 Individual Income and School District Income tax returns became available beginning on January 9th, 2012. Prior year returns are still available for use in responding to a delinquency notice you may have received.
Taxpayers who owe may use the Department of Taxation’s online ePayment system to pay by credit card or electronic check. This secure system even allows taxpayers to post-date electronic checks (so payment isn’t made until the tax is actually due). In order to use either of these services, taxpayers should first register with the Online Services Center.
Taxpayers who prepare a return with commercial software or the help of a paid tax preparer may be able to file their federal and state returns electronically through the federal/state e-file program overseen by the IRS. To help taxpayers make sure their software is compatible with the e-file program, the Department of Taxation maintains a list of approved software vendors.
Another filing option is almost as simple as picking up the phone. Ohio’s TeleFile system allows most Ohio taxpayers to file a state return by using a touchtone telephone.
You may have heard the claim that about half of Americans pay no federal income tax. That’s a true fact. My Tax Policy Center colleagues estimate, for example, that 46 percent of households either will pay no federal income tax in 2012 or will receive more from the IRS than they pay in.
Since we all benefit from federally supplied advantages like national defense, the interstate highway system and public education funding, I believe everyone who earns a halfway decent income should pay at least some federal income tax.
Freeloading should be against the rules except for those who are truly poor.
How did we get to the point where almost half of our citizenry is excused from paying any federal income tax despite being allowed to vote just like the other half? Keep reading for the answers.
Say you remarried with wage income of $50,250 and two children under the age of 17. After claiming the standard deduction and four personal exemption deductions, your 2010 tax bill is $2,800. However, it’s zeroed out by the child tax credit ($2,000) and the Making Work Pay credit ($800). So you owe nothing to the feds. If you have income from long-term capital gains or dividends, make deductible retirement account contributions, itemize deductions, or qualify for other tax breaks, your income could be even higher and you would still not owe any federal income tax.
Clearly, folks of relatively modest means should not have to pay a ton to the IRS but I don’t think it’s appropriate to pay nothing.
Appallingly enough, you can have a much higher income and still pay no federal income tax if you qualify for the right mix of breaks for things like buying a home, childcare expenses, college education costs, and making energy-efficient home improvements.
Low incomes (or, if you prefer, the standard deduction and personal exemptions) account for fully half of the people who pay no federal income tax. Another reason is that for many senior citizens, Social Security benefits are exempt from federal income taxes. That accounts for about 22 percent of the people who pay no federal income tax.
America uses the tax code to provide benefits to low-income families, particularly those with children. Taken together, the earned income tax credit, the child credit, and the childcare credit account for about 15 percent of the people who pay no federal income tax.
Taken together, these factors are about incomes that fall below the standard deduction and personal exemptions. The exemption for most Social Security benefits; and tax benefits aimed at low-income families and children account for almost 90 percent of the Americans who pay no federal income tax.
Need more help? You can always send them an e-mail. The goal is to respond to e-mails within 24 hours. For live help, taxpayer service agents are available at (800) 282-1780 from 8 a.m. to 5 p.m. Monday through Friday, with extended hours until 7 p.m. from April 2, 2012 through April 17, 2012.
