Income Taxes...?

Question

I have heard that if you make a certain amount of money, you are no longer taxes. I cannot remember what the number was...I believe that it was $68,000, but I believe I am wrong. But, besides that fact, I still want to know why this has been decided? What is the purpose of this exemption? (please don't go in too deep...) By the way, I heard this in the US.

Answer 1

If you had LESS than $8,450 in wages subject to withholding in 2006, you didn't pay any tax or need to file a return. (That's for a single taxpayer, under 65 and not the dependent of another taxpayer. If your status is different, your amount is different.

Once your income exceeds that amount, every dollar is taxable.

You may be thinking about the Social Security tax. It stops once your income hits $97,400 in any calendar year but then restarts on January 1st. All other taxes continue pretty much forever, regardless of how high your income goes.

Answer 2

What? You heard wrong. As your income goes up, the income tax rate goes up also, up to a maximum of 35%. And there's no top amount where if you make more, it's not taxed.

What you think you heard is just plain not correct. There are amounts for each filing status where if you make LESS than that, you aren't taxed.

Bostonian is correct that there is an upper limit that you pay social security taxes. This is because there's also an upper limit on how much you can get in monthly benefits from social security.

Answer 3

you must have heard this about the tax on social security which no longer applies after you reach the maximum subject to tax.

Years ago the maximum was $4800 but has been creeping up until now you dont max out until you make over $ 90,000. If you reach the maximum and are on a salary, then the employer discontinues withholding Soc Security, but continues to withhold medicare and income tax.

Income tax never maxes out. The more you make, the more you pay.

Answer 4

This is incorrect. Until we adopt the FairTax Act (H.R. 25) and all income taxes are replaced by a national sales tax, you will be taxed on all income. Under the current system your extra efforts in overtime or working harder to get ahead are punished with higher rates.
Under the FairTax, you will get a “prebate” cover the sales tax on necessities up to the poverty level so everyone has a fair chance advance and prosper.

Answer 5

You have some incorrect information. All income earned in the US is subject to federal income tax. The only limit is that only the first $97,500 of income is subject to Social Security (FICA) taxes. All levels of income are subject to Medicare and Federal Income Tax.

Answer 6

I assume you meant after making a certain amount you don't have to pay taxes. This is not true. You pay taxes no matter what you make unless it's under a certain amount which is about $5000.