- 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

How to Buy a Car

How to get the best deal and buy a car with confidence.

View Course »

How Financial Planners go Grocery Shopping

Learn to shop smart and save.

View Course »

TurboTax Articles

Video: Who Qualifies for an Affordable Care Act Exemption (Obamacare)?

The Affordable Care Act requires all Americans to have health insurance or pay a tax penalty. But, who qualifies for an Affordable Care Act exemption? Find out more about who qualifies for an exemption from the Affordable Care Act tax penalty, how to claim an exemption on your tax return and how the Affordable Care Act may affect your taxes with this video from TurboTax.

Video: How to Claim the Affordable Care Act Premium Tax Credit (Obamacare)

The Affordable Care Act Premium Tax Credit is a new refundable tax credit that can lower your monthly health insurance premiums. If you qualify for the tax credit, you can claim the Premium Tax Credit throughout the year to lower your monthly health insurance premiums, or claim the credit with your tax return to either lower your overall tax bill or increase your tax refund.

Deducting Summer Camps and Daycare with the Child and Dependent Care Credit

If you paid a daycare center, babysitter, summer camp, or other care provider to care for a qualifying child under age 13 or a disabled dependent of any age, you may qualify for a tax credit of up to up to 35 percent of qualifying expenses of $3,000 for one child or dependent, or up to $6,000 for two or more children or dependents.

What Is Schedule H: Household Employment Taxes

If you hire people to do work around your house on a regular basis, they might be considered household employees. Being an employer comes with some responsibilities for paying and reporting employment taxes, which includes filing a Schedule H with your federal tax return. But even if you have household employees, filing Schedule H is required only if the total wages you pay them is more than certain threshold amounts specified by federal tax law.

Add a Comment

*0 / 3000 Character Maximum

135 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
mac2jr

Corporate America pollutes our air, water, land with its chemicals, coal dust, nuclear waste, trash, fuel consumption, water consumption, oil spills, and much more, yet fails to pay its share of taxes to clean up the mess it makes. The cost falls squarely on the individual taxpayer, and this folks is one reason why we have to close down school programs, put up with poor streets, drive on unsafe bridges, etc.

Wake up America, Wake UP..

September 08 2013 at 2:14 AM Report abuse +1 rate up rate down Reply
mac2jr

We are shrinking our government just when we should be increasing it. Our population has grown from about 100,000,000 to 318,000,000 in the last 50 or 60 years; our need for roads, airports, sea ports, protections, etc., has grown proportionately, yet we still tend to believe that our governments should do with 1950 tools and labor force, it just does not work that way and our infrastructure is falling apart around our ears as we cut, cut, cut.

Corporate America Uses 99% of all the infrastructure for its purpose of making profits, it should be paying far more than the 1% to 17.5 % it is currently paying.

September 08 2013 at 2:07 AM Report abuse +1 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
1 reply to SisterGeriA's comment
mac2jr

You work for the IRS, that is how you KNOW this for a FACT... NO, then you don't know,do you?

Most getting child credit are singles that are widowed, divorced, or just knocked up by some guy that fled the state.

The EIC, earned income credit is for those that ARE WORKING, but due to the Company worked for, are not making enough to survive in the area in which he or she lives.

September 07 2013 at 11:05 PM Report abuse +1 rate up rate down Reply
1 reply to mac2jr's comment
dopey.obamite

I wanna meet craven's sister.

September 08 2013 at 1:13 AM Report abuse -2 rate up rate down
mac2jr

What everyone is missing is the Birth Rate, currently in the U.S.A. at 64 births per 1,000 population per year. We had a 'Baby Boom' that saw a high number of births during and immediately after WWII, and this boom in people are now all seniors in their late 60's or early 70's. The trend when the women decided to go into the marketplace in the 1970 - 1990 period was to have far less babies, only enough to replace oneself or the couple having the kids. Thus, we now have shortage of wage earners in their 40's and 50's paying taxes and helping the seniors with SS.

This will start to straighten out in the next 10 or so years as the boom of seniors die off and the workers again outnumber the retired.

September 07 2013 at 9:47 PM Report abuse +2 rate up rate down Reply
1 reply to mac2jr's comment
SisterGeriA

What about the millions of babies aborted each year???

September 07 2013 at 10:54 PM Report abuse -1 rate up rate down Reply
1 reply to SisterGeriA's comment
mac2jr

What about them?

September 07 2013 at 11:01 PM Report abuse rate up rate down