More On Tax Planningfrom The Advisor's Professional Library
- IRAs: In General Individual Retirement Accounts are highly popular tools for contributing funds that grow on a tax deferred basis. Depending on the type of IRA, the accumulation can be tax free.
- Long Term Care Insurance: Premiums While premiums for qualified long-term-care insurance may be deductible as medical expenses there are exceptions to this general rule. Learn how to avoid unnecessary tax liabilities.
In what is sure to fuel conservative critics of the president’s plan to raise taxes on the wealthy under the so-called “Buffett Rule,” the Whitehouse announced on Friday that Barack and Michelle Obama paid an effective federal tax rate of 20.5% on income of $789,674 in 2011.
The president, along with Vice President Jow Biden, spent much of the past week traveling to promote their argument for the rule, named for the famed investor Warren Buffett.
About half of the first family’s income is the president’s salary; the other half is from sales proceeds of his books. The Obamas paid $162,074 in total tax.
The president and first lady also reported donating $172,130—or about 22% of their adjusted gross income—to 39 different charities, according to the White House. The largest reported gift to charity was a $117,130 contribution to the Fisher House Foundation, a group that houses families of wounded service members.
“The president believes we must reform our tax system, which is why he has proposed policies like the Buffett Rule that would ask the wealthiest Americans to pay their fair share while protecting families making under $250,000 from seeing their taxes go up,” the White House said. “Under the President’s own tax proposals, including the expiration of the high-income tax cuts and limitations on the value of tax preferences for high-income households, he would pay more in taxes while ensuring we cut taxes for the middle class and those trying to get in it.”
The president and first lady also released their Illinois income tax return and reported paying $31,941 in state income tax.
The vice president and his wife, Jill, also released their 2011 federal income tax returns, as well as state income tax returns for both Delaware and Virginia. Together, they reported adjusted gross income of $379,035. The Bidens paid $87,900 in total federal tax for 2011, or roughly a 23% effective rate. They paid $13,843 in Delaware income tax and $3,614 in Virginia income tax. The Bidens contributed $5,540 to charity in 2011.