Maybe I'm missing something
TaxProf Blog is commenting on a WSJ story ($$ required) about people who paid no tax in 2001:
The Internal Revenue Service says that of the 2.6 million individual tax returns that reported income of $200,000 or more, there were 4,119 taxpayers who owed zero federal and foreign income taxes for 2001, the latest available year. That was up from 2,320 in 2000 and only 1,562 as recently as 1997. Typically, there is no one explanation for achieving tax-free status. It usually is a combination of factors, such as large amounts of tax-exempt bond interest, medical bills, charitable contributions, casualty losses (such as from a fire or earthquake), business losses and investment losses....
Is it surprising that number would rise between 1997 (when the economy was booming) and 2001 (when it was relatively sedate)? I would have thought most of the effect would come from those in 2001 who made money in that year but were declaring losses from 2000. (I've not looked up the article on Lexis yet, so I don't know if the question is answered therein.)
Questions like this just make me want to take a Tax class next year. Doing my own taxes is confusing enough. I don't know if someone who was carrying over losses from a prior year (say, in an S corporation) would be counted as not having the income in the present year (thus, being under the $200K income limit) or as having an income over $200K but deductions bringing taxable income beneath that.
It's a confusing topic. Me, I'm probably filing an extension anyway...
Comments
Posted by: martin | April 15, 2005 7:36 AM