Despite Record Collections, 52,062,499 Filers Paid No Income Taxes in 2014

By Terence P. Jeffrey | April 18, 2017 | 12:30pm EDT
(AP Photo)

( - In tax year 2014, according to a report published by the Internal Revenue Service, the federal government hauled in a then-record $1,377,797,136,000 in individual income taxes.

Nonetheless, of the 148,606,578 individual income tax return filers that year, 52,062,499 (or 35 percent) filed what the IRS calls “nontaxable returns,” which means they paid no net individual income taxes.

Among these 52,062,499 filers who did not pay income taxes in 2014, according to Table 3.3 in the report, were 31,129,405 filers who also received $90,276,007,000 in payments from the federal government for “refundable” tax credits.

“In total, taxpayers claimed $105.6 billion in refundable tax credits,” said the IRS report. “Of this, $5.5 billion was applied against income taxes and $9.8 billion against all other taxes. The remaining $90.3 billion in refundable tax credits was refunded to taxpayers.”

"Tax credits are used to offset taxes," the report explains. "Certain tax credits are also refundable in that if the credit exceeds the total tax owed, the excess can be refunded to the taxpayer."

One example of a refundable tax credit is the “Earned Income Tax Credit.” “The Earned Income Tax Credit for 2014,” the IRS explains, “was a maximum of $496 for taxpayers with no qualifying children, $3,305 for one qualifying child, $5,460 for two qualifying children, and $6,143 for taxpayers with three or more qualifying children.”

For a married couple filing jointly to be eligible for the EIC in 2014, said the IRS, “earned income and adjusted gross income had to be less than $43,941 for one child, $49,186 for two children and $52,427 for three children or more.”

A married couple with two children earning $50,000 or more would not qualify for this refundable credit.

Another refundable credit available in 2014 was for health insurance premiums under Obamacare. “Beginning in 2014,” said the IRS, “a taxpayer may have been eligible for the premium tax credit if they, their spouse, or a dependent enrolled in health insurance through the Health Insurance Marketplace.”

The effect of “refundable” tax credits, according to the data published by the IRS in Figure F of its report, is that the entire class of tax filers earning under $30,000 in 2014 collectively paid a net negative in federal income taxes. For example, according to the report, the “total income tax minus refundable credits” paid by the 18,881,000 tax filers earning between $20,000 and $30,000 in 2014 was a negative $12,003,000,000.

The 52,062,499 filers who had “nontaxable returns” in 2014 and paid no income taxes equaled 35 percent of all filers.

The other 96,544,079 filers--the 65 percent of filers who did pay income taxes--paid an average of $14,271, according to Figure A in the IRS report.

According to Table 1.1 in the IRS report, there were 54,291,649 tax filers—or about 36.5 percent of all filers—who filed taxable returns with adjusted gross incomes of $50,000 or more. These taxpayers paid total income taxes of $1,300,748,208,000—or 94.4 percent of the $1,377,797,136,000 in total income taxes paid that year.

The 148,606,578 filers included single individuals, married couples filing jointly, married persons filing separately, surviving spouses and heads of households.

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