Who Pays Taxes? | Tax Tip of the Week | No. 112

51% of Households Owed No Federal Income Tax in 2009

The nonpartisan Joint Committee on Taxation recently announced a study showing 51% of American households had no federal income tax in 2009.  Also, about 30% of households received refund checks in excess of their tax withholdings.  This is due to refundable credits such as the Earned Income Tax Credit, Home Buyer’s Credit, etc. (For a closer look at tax credits please refer to TTW #87).It is important to remember that this study only addressed federal income taxes.  All workers are still subject to payroll taxes, state income taxes and possibly city income taxes.The number of households not paying taxes increased in 2009 due, in part, to the effects of the recession that resulted in a higher number of low income workers.It is also important to note the Home Buyer’s Credit and Making Work Pay Credit are no longer in effect.So who pays taxes?Percentiles                  AGI                  % ofby AGI                Thresholds          FederalTaxes PaidTop 1%                   $389,354          38.02%Top 5%                     159,619          58.72Top 10%                   113,799          69.94Top 25%                     67,280          86.34Top 50%                     33,048          97.30Bottom 50%       under 33,048            2.7Based on Tax Year 2008Source:  National Taxpayers UnionWant to make sure that you are only paying your fair share?----just give us a call!

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.Rick Prewitt - the guy behind TTW...until next week.