- Days left

Who Doesn't Pay Federal Taxes? A Peek at the Numbers

×
federal government taxes
Getty Images
By Lisa Mahapatra

Only 14 percent of U.S. residents pay neither income tax nor payroll taxes, and most of them are elderly or make less than $20,000 in annual income, according to a new report from the Tax Policy Center.

The number of people who pay both federal income tax and payroll tax increased from 53.1 percent in 2011 to 56.7 percent in 2012. This is likely due to an improving economy and the expiration of temporary recession tax cuts, according to the Tax Policy Center report.

Twenty-nine percent don't pay federal income tax but do pay payroll tax. Even the 14 percent who pay neither payroll tax nor income tax do pay Social Security, state and local taxes or some other tax, the report said.

And the remaining 1 percent mostly benefit from the tax code's many exclusions, deductions, exemptions and credits that wipe out the income tax they would otherwise owe, according to the report.


Increase your money and finance knowledge from home

Building Credit from Scratch

Start building credit...now.

View Course »

Basics Of The Stock Market

Stock Market 101 - everything you need to know but were afraid to ask!

View Course »

TurboTax Articles

Employer Sponsored Health Coverage Explained

The Affordable Care Act, also known as Obamacare, is simpler than some people may give it credit for. The basic rule to remember is that everyone must carry Minimum Essential Coverage (MEC) or pay a penalty. Employers with 50 full-time employees or more are obligated to sponsor plans for their workers to help them meet this requirement.

How to Report RSUs or Stock Grants on Your Tax Return

Restricted stock units (RSUs) and stock grants are often used by companies to reward their employees with an investment in the company rather than with cash. As the name implies, RSUs have rules as to when they can be sold. Stock grants often carry restrictions as well. How your stock grant is delivered to you, and whether or not it is vested, are the key factors when determining tax treatment.

What is a Schedule Q Form?

The Internal Revenue Service (IRS) has two very different forms that go by the name Schedule Q. One of them is for people who participate in certain real estate investments; this is known as a Form 1066 Schedule Q. The other Schedule Q deals with employer benefit plans. It?s not something an individual taxpayer would normally have to deal with, though a small business owner might need it.

Incentive Stock Options

Some employers use Incentive Stock Options (ISOs) as a way to attract and retain employees. While ISOs can offer a valuable opportunity to participate in your company's growth and profits, there are tax implications you should be aware of. We'll help you understand ISOs and fill you in on important timetables that affect your tax liability, so you can optimize the value of your ISOs.

Add a Comment

*0 / 3000 Character Maximum

79 Comments

Filter by:
frankwmadden

when I worked they took my tax money.union dues.fica ss etc.with a shovel.now retired they give it back with a spoon.

September 10 2013 at 7:14 AM Report abuse rate up rate down Reply
bobnpath

article seems to presume paying taxes with our money is the highest good? is it?

September 08 2013 at 6:44 AM Report abuse rate up rate down Reply
toosmart4u

Look to the 5 billion tax benefits the oil companies receive thanks to the GOP. Exxon-Mobile paid no incomes taxes last year and received a check from the irs of 187 million dollars. Do we call this fair? The GOP does. Look at all the billions the oil companies made in profits. Our tax system has a lot to clean up and this is one of them. On social security and medicare, thank a democrat.

September 08 2013 at 3:28 AM Report abuse +1 rate up rate down Reply
1 reply to toosmart4u's comment
iamsmooth48

Go ahead and tax the big companies all you want. Who will pay for the decrease in profits.. YOU...DA

September 08 2013 at 4:10 AM Report abuse rate up rate down Reply
white41990

Just about everyone pays taxes, but think of what you are getting today because of it, look at what your taxes provide, yes I can agree the tax system needs alot of change to it especially in the amount citizens are paying verses there income but those who expect a free handout just because they live in America need to get their head examined.

September 08 2013 at 12:19 AM Report abuse rate up rate down Reply
lmart10452

Retirement income, coming from whatever source, i.e. Social Security, IRA or Pension should be tax free. This change should be part of a serious overhaul of our tax code that increasingly favors people in the higher earnings brackets.

September 07 2013 at 11:50 PM Report abuse +1 rate up rate down Reply
stylz2k69

The biggest loser: The poor middle class homeowner who has to pay high Federal and State taxes and then is crucified with never ending increases in their Real Estate taxes and gets no Federal and State aid to help their kids pay for college and health care.

September 07 2013 at 11:13 PM Report abuse +2 rate up rate down Reply
SisterGeriA

But what you do not tell is the hugh tax returns for people that pay no income tax with the child credit, unearned income credit, etc.
And it is paid to illegals that claim children not living in this country.

September 07 2013 at 10:52 PM Report abuse +3 rate up rate down Reply
frebee2

they left out the illegal aliens who are paid under the table.

September 07 2013 at 8:06 PM Report abuse +2 rate up rate down Reply
kluj1

I am ok with the elderly and or very poor not paying. Everyone else needs to pay up.

September 07 2013 at 6:57 PM Report abuse +4 rate up rate down Reply
LadyPurpose

So this would be the famed 1% then?

September 07 2013 at 5:52 PM Report abuse +4 rate up rate down Reply