Question about taxes for those of you watched Rachel tonight

[senseandsensibility]

I'm watching on a delay, and just heard her say that anyone earning less than 75,000 a year will owe no taxes, and people earning less than 100,000 will owe a single digit percentage, below 2% in federal taxes. This is due to Biden's stimulus package which already passed.

Is this per person (that's how it was worded) or per household?

[qazplm135]

1. unless the biggest tax change in history has happened

I don't think that's remotely right.

The lowest tax bracket is 10 percent. all the way up to 37 percent.

I'm pretty sure the stimulus package did not basically erase all taxes on people making less than 100K a year.

[Deminpenn]

2. Apparently there were tax cuts included for those earning less than 100k

yr. Who knew?

[qazplm135]

3. not all the way to zero though

"Much of the tax cuts came in the form of stimulus checks, though Democrats also dramatically expanded the Child Tax Credit, beefed up a break for dependent care expenses and expanded the Earned Income Tax Credit."

So no, the tax rates didn't change, but the stimulus checks are being used to offset the taxes paid (along with some other credits) to argue that the net effect is zero federal taxes. But that's not really what the stimulus checks were for. And it's only for this year using that kind of calculation. The tax rates remain. People are still paying the same rates.

[Bev54]

4. Yes it is correct for this year only under the relief package.

She just said earning so not sure if it is per person or not.

[qazplm135]

5. only if you count the stimulus

against the tax bill, which isn't really the purpose of the stimulus.

Stimulus is supposed to be extra, that you use, you spend. Most folks are not applying it towards next year's taxes.

[Bev54]

6. Here is the article Rachel was referring to

https://www.politico.com/news/2021/04/25/dems-tax-cuts-biden-484476

[senseandsensibility]

7. Thanks.

I read it, but couldn't tell if it was individuals or households. It seemed to imply that it was individuals but never explicitly stated it. Anyway, it was nice of you post the link.

[ZonkerHarris]

8. It's tax regulations. They don't want us to understand them.

[PrinceHakeem]

9. So can someone interpret this for us?

[Deminpenn]

10. First these tax breaks only apply to this year

2 There is no change to actual tax rates.
3 Earned Income Tax Credit is expanded meaning more lower income Americans will get more money back
4 The stimulus payments are in essence advances on 2021 refunds
5 Increased child tax credits will offset any taxes owed
6 Increasing the deduction for medical care will also decrease taxes. Unclear if more expenses will qualify as deductible or if the 20% over AGI threshhold was lowered. This will help anyone who has these expenses like adults who cannot live at home without help or are in assisted living or those who need medical devices like walkers, wheelchairs, stair lifts and so forth or in any combination.

[PrinceHakeem]

11. So if my mom makes under 50k from retirement and social security, does she have to pay

the 3-4k in taxes she usually has to?

[Deminpenn]

12. Assuming she got the 1400+600 stimulus payments

she would still pay the same amount, but with the non-taxable federal stimulus payment applied, she has an effective 50-75% tax cut.

I don't necessarily agree with this logic, but that's what it is.