Quote:
Originally Posted by
bionicarm http:///forum/thread/380296/tea-party-movement/180#post_3311640
I kknow exactly how it works. Yes, they do hold out less for each exemption that you claim. But based on your taxable income, BEFORE DEDUCTIONS, you are liable for a certain amount of income tax to be paid to the IRS. Example:
Married couple, no kids - husband/wife claim Zero exemptions - Taxable Income before deduction $100.000. $15,000 taken out of payroll deductions for income taxes. Taxes on $100,000 -$13,000. They get $2,000 REFUND on tax return.
Married couple, 4 kids - husband claims 5 exemptions, wife claims 1 - Taxable income before deduction $100,000. $8,000 taken out of payroll deductions for income taxes (less money taken out because of exemptions), Taxes on $100,000 - $13,000. They have to PAY $5,000 back to the IRS for not paying enough income taxes during the year.
Now these are not exact numbers, but you get what I mean. Both families still have to pay the same amount of taxes based on their earned income. There no different between the two. Now the family with the kids can reduce the $5,000 they owe by child credits, daycare expenses, etc. But both families start out owing the same amount regardless. Like I said, "Pay them now, or pay them later"
LOL!
The couple with kids don't have to pay anything back because they claimed the correct amount of deductions. Less money is held out of their paycheck because at the end of the year they don't owe as much tax.
Example
Couple one earns 100,000.00 and has no kids. They claim the standard deduction for married filing jointly which we'll say is 10,000.00 so they pay taxes on 90 grand. Lets say that they are in a 10% tax bracket so they owe 9k in taxes so 750.00 per week is held out. At the end of the year they should have paid the amount owed unless they have additional income or credits they can file.
Couple two earns 100,000.00 and has 4 kids. They claim the same married filing joint deduction of 10,000.00. They they add the dependent deduction of 3650 per kid, 3650x4= 14600.00
So by virtue of having 4 kids their taxable income is decreased by another 14600.00 for a total taxable income of 75,400.00. so they owe 7,540.00 so they will have 628.00 held out per check and again should be even with the government at the end of the year.
Couple two pay and owe 1,460 less in income taxes Plus they can file for the 1000.00 per child credit and also the child care credit if they qualify.