Posted on April 24th, 2022

President Joe Biden and Vice President Kamala Harris have released their 2021 tax returns, and there are a few key takeaways for the average American, experts say.

The president and first lady Jill Biden reported a joint adjusted gross income of $610,702, paying $150,439 in federal income tax at a 24.6% effective tax rate.

Vice President Kamala Harris and her husband, Douglas Emhoff, showed roughly $1.7 million in earnings, paying $523,371 in federal taxes at a 31.6% tax rate.   

Both returns were similar to 2020, putting them in the top 1% of filers, according to IRS data. By comparison, the average American paid a 13.3% tax rate in 2019, according to the Tax Foundation.

“They’re both overpaying, particularly Kamala and her husband,” said Eric Pierre, an Austin, Texas-based certified public accountant, owner of Pierre Accounting and co-host of the CPA Huddle podcast.

For example, Harris earned more than $450,000 in gross earnings as a writer in 2021 and skipped the chance to save on payroll taxes by structuring her business as an S-corporation.

After paying employee shareholders reasonable compensation, owners may also take distributions without the combined 15.3% for Social Security and Medicare taxes.

“She’s probably going to make a lot more than her husband when she’s not in office,” he said, adding how an S-corporation may provide significant future savings.

There also may be missed opportunities for Emhoff, who received nearly $600,000 in partnership income in 2021, Pierre said.

Original article: https://www.cnbc.com/2022/04/20/what-we-learned-from-biden-harris-tax-returns-according-to-experts.html