It seemed like I paid taxes since I had to debit $1500 for taxes from my checking account. I’m actually still in the approximately 46% of Americans that did not pay federal income tax last year though. My tax bill was $1300 for self-employment tax and $200 for state income tax but $0 for federal income tax so I’m still in the 46%.
I would have owed federal income tax but I contributed over $4000 to a deductible traditional IRA, took the student loan interest deduction, and the saver’s credit. I plan to take similar deductions and credits on my federal income taxes next year. I don’t feel bad about taking deductions and credits to reduce my federal income tax owed to $0. The following Learned Hand quote pretty much sums up my feelings on the subject.
“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”