Tuesday, January 29, 2008

Some Good..make that GREAT Tax News

Get married and use all the retirement saving credits and deductions and you can save a ton. According to the calculation below you can earn $55k and pay no taxes. Haven't double checked his calcs but it looks realistic. Its from the Carnival of Taxes.


Here’s what Joe Taxpayer did:

• Got married and stayed that way—this earns him $17,500.

• Contributed the max to a 401k plan—this earns him $15,500.

• Contributed the max to two IRAs (his & his wife’s)—this earns him $8,000.

• Because he contributed so much to savings, he got the saver’s credit—this covered what little he did owe after all deductions and other credits. This could’ve earned him up to $2,000, but only earned him $1,148.

• He contributes to his employer’s pension plan and opted for a PPO plan—this earns him $2,550 in pre-tax dollars.

• He used a commercial tax preparer for his return—they cost him $165 to use, but got him over ten times that amount for a refund. They do this consistently.