On Friday, the Democrats released six years of income tax returns for former President Donald Trump, offering a closer look at his tax situation and the methods he utilized as a real estate mogul to minimize his tax burden.
Insights Into Trump’s Tax Situation and Financial Management
According to a report released by the congressional Joint Committee on Taxation on Tuesday, Trump and his wife, Melania, paid no income taxes in 2020.
The report also identified several potential issues with the filings, including Trump’s carryover losses, loans to his children that may be considered taxable gifts, and deductions that could be used as tax write-offs.
These findings raise questions about the former president’s tax strategy and financial management.
In 2020, the Trumps reported a loss of $4.8 million, due to the impact of the COVID pandemic. In the preceding two years, their reported income increased, resulting in federal tax payments of roughly $1.1 million per year.
It is worth noting that the Internal Revenue Service didn’t start auditing Trump’s tax filings from 2015 until April 3, 2019, more than two years into his presidency, indicating the agency’s limited resources at the time.
I’m actually glad SCOTUS ruled Trump had to turn over his tax returns b/c Deep State just created a legal precedent they’re going to severely regret
Let’s start seeing *everybody’s* tax returns starting w/McConnell, Pelosi, Schiff, and Cheney
Sunlight is the best disinfectant!
— Rogan O’Handley (@DC_Draino) December 30, 2022
Auditing of Income Taxes of the President is Unique
According to an internal IRS memo, auditing the income taxes of the president of the United States is a unique process, compared to auditing the taxes of any other American.
The president holds significant power, including the ability to sign bills into law and personally direct every department, agency, bureau, and office of the executive branch, which could potentially impact their personal financial situation.
The United States operates on a largely voluntary tax compliance system, with oversight and auditing in place to ensure fair and unbiased administration of tax laws.
This system relies on the public’s trust and confidence in order to maintain the integrity of the country’s revenue system and democracy.
This year, approximately 72.5 million households in the U.S., or 40%, will not have to pay federal income tax, according to estimates from the Tax Policy Center.
This year, some 72.5 million U.S. households, or 40%, will pay no federal income tax, down from the pandemic high of 100 million households, or 60%, two years ago, according to estimates from the Tax Policy Center. #yahoo
— Bigbull1029 (@BigBull1029) December 30, 2022
This is a decrease from the pandemic high of 100 million households, or 60%, two years ago. In 2021, almost 56% of homes, which is about 99 million, expended zero in federal income tax, according to a report from the apolitical think tank earlier this year.
However, the reason for the Trumps’ lack of tax payment – their reported loss of nearly $5 million – is significantly different from the reason that most of the other 60% of Americans paid nothing in 2020.
Individuals and married couples who earn less than the standard deduction – $12,950 for individuals and $25,900 for married couples filing jointly in 2022 – are not required to pay federal income taxes.
Tax experts recommend filing a return to access tax credits such as the earned-income tax credit and the child tax credit.