Friday, December 6, 2013

Tax Year 2013's Magic Number

You can interpret this post any way you want to, but, for me, it's just a data point that I like to be aware of.  Some may use it for political points, others for planning.  For me, it's just something I do every year, for my own personal enjoyment.

What I do is, I calculate exactly how much money a hypethetical family of four can make, and pay no Federal Income Taxes.

My family, let's call them the Magic's, have one income source (though it would work the same with two) and have nothing withheld for Federal Income Taxes.  They of course pay the 7.65% Social Security and Medicare Tax, but that's not what this post is about.  They have two children, both under age 17 who live at home.  They pay no college expenses, no daycare, or have any other fancy credits.  They don't itemize, so they take the standard deduction.  They do get the Child Tax Credit and the Earned Income Credit, based on their income levels and children.

Mr (or Mrs) Magic can earn $47,849 this year, and still get a $5 refund - this after having NO Federal Income Tax withheld.

Feel free to check my numbers and let me know if I screwed this up (it's happened before).

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