General Question

saservp's avatar

How much can you earn tax-free?

Asked by saservp (291points) August 25th, 2010

I tried to figure this out by looking at the tax brackets, but they seem to say that anything up to about 16k is in the 10% tax bracket.

For some reason I thought there was a number, around 5k-8k which you could earn without being taxed. Am I just making this up?

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12 Answers

saservp's avatar

Hey thanks, the moneychimp link was the first one to pop up on google but it kept timing out when I clicked on it ;)

llewis's avatar

(for 2009 – don’t have the info for 2010 yet) If you are single and under 65, you don’t have to file if your gross income was UNDER $9,350. Married, $18,700. You can download the 1040 instructions (filename i1040.pdf) and get this info, and it’s probably on the website, too. You may want to file anyway if you qualify for certain credits, like the earned income credit, the making work pay credit, and some others.

Rules are different if you are a child or a dependent of another taxpayer, or if you have other taxes you have to file (like self-employment tax, or taxes on an IRA or something).

I’d say get the 1040 instructions and just check it out to see what applies in your case. You can get them here, and search for 1040 under Form and Instruction number, then download the Inst 1040 document.

saservp's avatar

Oh I think I figured it out. So is the amount of ‘tax free’ income basically whatever your standard deduction is?

I.E. If I make less than the standard deduction, then my net income is less than zero, and thus no tax.

My workplace is deducting tax automatically, so as I understand it I should be entitled to get 100% of it back because I made well below the standard deduction this year.

OK thanks everyone :)

llewis's avatar

You may qualify for a credit, and get something back on top of the refund of your withholding. Check out all the rules carefully! :D Just go thru the instructions line by line (as my tax teacher used to say, “Eat the elephant one bite at a time.”)

And remember, the 2010 info isn’t out yet, and will probably be a little different than the 2009. Or maybe a lot different, if certain credits expire.

saservp's avatar

Thanks Llewis. I’ll look at the credit but I don’t need the government to pay me extra, I just don’t want to pay them a penny more than I need to ;-)

llewis's avatar

Oh, don’t worry. They’ll get it back from you at some point. (Who says you can’t get blood from a turnip? <grin>)

GeorgeGee's avatar

It depends on where you live. Choose one of these if you don’t like income tax:
United Arab Emirates

jaytkay's avatar

The amount is $9,350 for a single person and $18,700 for a couple. $9,350 is the standard deduction plus the personal exemption ($5,700 + $3,650).

And this is essentially the same for everyone. For example, a single person with a taxable income of $109,350.00 who takes the standard deduction will be taxed on an adjusted gross income of $100,000.

shelley's avatar

I live in Dubai, UAE which is tax free on income. I’m Aussie and in Aust and you can only earn up to 6000AUD per year before you’re taxed, then it goes up in brackets. It completely depends on where you live and how much you earn.

jerv's avatar

I think it depends on how good your accountant is. Many corporations pay zero tax, and many rich individuals find some sort of dodge.

Realistically, the easiest way is to be relatively poor with a lot of kids. Well, easiest for tax purposes anyways.

@llewis Let us hope that the “Make America Work” credit is back for 2010!

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