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By the Numbers: 2011 Tax returns - Some Middle Class tax Scenarios (w/t & w/o)

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FrenchieCat Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 03:47 PM
Original message
By the Numbers: 2011 Tax returns - Some Middle Class tax Scenarios (w/t & w/o)
The important differences to compute, as far as I'm concerned
are the differences between w/t Compromise or w/t Bush taxes expire w/o compromise,
as they are the only options barring a miracle...which I don't foresee.

(Disclaimer: There is always a chance I made an error, as I computed manually,
and used a 2009 tax program (2010 isn't out yet),
as well as an Internet tax table calculator for 2010/2011.
I did check things twice, but I'm used to doing this stuff on computer,
and not accustomed to posting various scenarios all at once on-line. Just saying! :)



Scenario # 1 - single person earning $10,000

Currently w/t Bush tax cuts:
Single person earning $10,000 per year.
Taxable income in 2010 is $650.
Tax @ 10% = $65
Make Work credit is $400
tax liability is REFUND $335


With No deal & Bush tax cuts expired:
Same person earning $10,000 per year.
Taxable income in 2011 is $650.
Tax $ 15% = $97.50
No more Work credit
Tax liability is PAY $97.50


With tax compromise:
Same person earning $10,000 per year.
Taxable income in 2011 is $650.
Tax $ 10% = $65
No more Work credit
add 2% in Payroll tax deduction of $200
Tax liability is REFUND OF $135



Scenario # 2 single person earning $18,000

Currently w/t Bush tax cuts:
Single person earning $18,000 per year.
Taxable income in 2010 is $8,650.
Tax @ 10% = $884
Make Work credit is $400
tax liability is PAY $484


With No deal & Bush tax cuts expired:
Same person earning $18,000 per year.
Taxable income in 2011 is $8,650.
Tax $ 15% = $1,297.50
No more Work credit
Tax liability is PAY $1,297.50


With tax compromise:
Same person earning $18,000 per year.
Taxable income in 2011 is $8,650.
Tax $ 10% = $884
No more Work credit
add 2% in Payroll tax deduction
Tax liability is PAY $524



Scenario # 3 Married Couple w/o chilren earning $25,000

Currently w/t Bush tax cuts:
Married Couple earning $25,000 per year, without children
Taxable income in 2010 is $6,300.
Tax @ 10% = $633
Make Work credit is $800
tax liability is REFUND of $167


With No deal & Bush tax cuts expired:
Same couple earning $25,000 per year.
Taxable income in 2011 is $7,950 (due to change in marriage penalty)
Tax @ 15% = $1,192.50
No more Work credit
Tax liability is PAY $1,192.50


With tax compromise:
Same couple earning $25,000 per year.
Taxable income in 2011 is $6,300.
Tax @ 10% = $663
No more Work credit
add 2% in Payroll tax deduction of $500
Tax liability is PAY $139



Scenario # 4 Married Couple w/t 2 children earning $25,000

Currently w/t Bush tax cuts:
Married Couple earning $25,000 per year, with 2 children
Taxable income in 2010 is $ ZERO.
Tax @ 10% = $ZERO
Child tax credit is $2,000
EIC (earned Inc. Tax Credit) = $4,415
Make Work credit is $800
tax liability is REFUND of $7,215


With No deal & Bush tax cuts expired:
Same couple earning $25,000 per year with 2 children.
Taxable income in 2011 is $550 (due to change in marriage penalty)
Tax @ 15% = $82.50
Child Tax Credit given= $82.50
EIC (earned Inc. Tax Credit) = $3,362
No additional Child Tax Credit given= $ ZER0
No more Work credit
Tax liability is REFUND OF $3,362


With tax compromise:
Same couple earning $25,000 per year, with 2 children
Taxable income in 2011 is $ ZERO.
Tax @ 10% = $ ZERO
No more Work credit
EIC (earned Inc. Tax Credit) = $4,415
Child Tax Credit given= $2,000
add 2% in Payroll tax deduction of $500
Tax liability is REFUND OF $6,915


Scenario # 3 Married Couple w/t 2 children earning $40,000

Currently w/t Bush tax cuts:
Married Couple w/t 2 children earning $40,000 per year.
Taxable income in 2010 is $14,000. (without itemization)
Tax @ 10% = $1,403
Child Tax Credit given= $1,403
Tax Liability = zero
EIC (earned Inc. Tax Credit) = $1,256
Make Work credit is $800
additional child tax credit of $597
tax liability is REFUND of $2,653


With No deal & Bush tax cuts expired:
Same couple earning $40,000 per year.
Taxable income in 2011 is $15,550 (due to change in marriage penalty)
Tax @ 15% = $2,332.50
Child Tax Credit given= $1,000
EIC (earned Inc. Tax Credit) = $203
No more Work credit
Tax liability is PAY $1,129.50


With tax compromise:
Same couple earning $40,0000 per year.
Taxable income in 2011 is $14,000.
Tax @ 10% = $1,403
Child Tax Credit given= $1,403
EIC (earned Inc. Tax Credit) = $1,256
No more Work credit
additional child tax credit of $597
add 2% in Payroll tax deduction of $800
Tax liability is REFUND OF $2,653



Please note that it is more difficult to caculate easily a more affluent person's tax scenario, because of all of the variables....but if someone wants to give me one or two, I can see what I can do in making the various computations. Bottomline is that I'm more concerned with the poor and the middle class.

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elleng Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 05:59 PM
Response to Original message
1. THX, Frenchie!
Edited on Sun Dec-12-10 06:11 PM by elleng
May I post 'out there?'

In 'Finance' or 'Econ?'

NVM, Frenchie; I see you have done so.
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FrenchieCat Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 07:31 PM
Response to Reply #1
2. But you usually don't have to ask me....if I post it, please use it...where-ever!
:hi:
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elleng Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 07:59 PM
Response to Reply #2
3. THANKS, dear Frenchie!
:hi:
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FrenchieCat Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 08:06 PM
Response to Reply #3
4. Like they say in the Islands......
No Problem! :hug:
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