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What is Adjusted Gross Income (AGI) and Modified Adjusted Gross Income (MAGI)? – Councilor Forbes

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Your Adjusted Gross Income (AGI) is what it sounds like your gross income minus some adjustments. You will most often come across this term when filing your taxes.

Your AGI plays a vital role in determining the tax credits or deductions you can claim on your tax return. Generally, if your AGI is too high, you will not be eligible for tax deductions such as the interest deduction on student loans, education credits, and certain itemized deductions. Your AGI also determines your tax bracket and how much you will pay in income taxes.

The Median AGI for the 2018 tax year (the latest data available) was $ 43,614, although this amount differs from person to person.

Here’s what you need to know about your AGI and why it’s so important.

What is Adjusted Gross Income (AGI)?

Adjusted Gross Income (AGI) is defined as your gross income less some adjustments. Your gross income only includes taxable income, such as:

  • Wages
  • Dividends
  • Business income Other types of income, such as capital gains and retirement distributions

To calculate your AGI, you may be able to subtract expenses from this gross income figure, including:

  • Educator’s expenses
  • Student loan interest
  • Support payments
  • Contributions to a retirement account

Your AGI will never be more than your total gross income reported on your tax return and, as a rule, it is less than your gross income. However, if you are not entitled to any deduction, your AGI may be equal to the total amount of your gross income. You can find your AGI on line 11 of your Form 1040.

How to calculate adjusted gross income (AGI)

To calculate your AGI, you must first start with your gross income, that is, any income you receive that is subject to tax. You will then need to subtract your adjustments from your total gross income to calculate your AGI.

Add up the gross taxable income:
  • Business income
  • Rental income
  • Salary, salary and tips
  • Unemployment benefits
  • State taxable refunds
  • Taxable social security
  • Dividends
  • Interest
  • Net sale of assets
  • IRA Distributions
  • Pensions and annuities
  • Other income, such as support payments received
Minus any adjustment:
  • Charitable donations
  • Educator’s expenses
  • Moving expenses
  • Deductible self-employment taxes
  • Health savings account deduction
  • Health insurance for self-employed workers
  • Alimony paid
  • Deduction of tuition and fees
  • Early penalty on savings withdrawals
  • Other adjustments
Total IGA Total gross income subject to tax less total adjustments

Adjusted gross income (AGI) vs modified adjusted gross income (MAGI): what’s the difference?

Modified adjusted gross income (MAGI) is slightly different from AGI. Unlike your AGI which is a number, your MAGI may differ depending on the tax credit or deduction for which you are claiming. But like the AGI, it can also determine any tax deductions or credits you may be entitled to on your tax return.

Typically, your MAGI is your adjusted AGI for certain expenses and income. Generally, your MAGI calculation is your AGI but adding the interest of the student loan. However, the IRS may calculate your MAGI differently based on the tax credit or deduction.

Here are some examples of how MAGI determines certain tax deductions and credits:

Premium tax credits: Your MAGI for premium tax credits and other tax savings for Health insurance market is your AGI plus any non-taxable foreign income, non-taxable Social Security benefits, and tax-exempt interest.

Child tax credit: Your MAGI for Child Tax Credit and Child Tax Credit Advance Payments is your AGI plus certain foreign income sources.

The American Opportunity Tax Credit: Your MAGI for American Opportunity Tax Credit is your AGI as well as certain foreign income sources.

For many taxpayers, their MAGI total is the same or very close to their AGI, since the adjustments some taxpayers make will only slightly change the final number.

Deductions and tax credits calculated using your AGI or MAGI

After determining your AGI or MAGI, you can choose which tax deductions or tax credits you can claim on your tax return. Here are the main tax credits and deductions depending on your AGI or MAGI.


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How to determine your adjusted gross income?

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If you want to be a model citizen, you have to pay your taxes on time. This is one of the things that allows you to have many other benefits. And when you say taxes, you may have heard of the term adjusted gross income. Well, this is an important phrase to understand because it will help you figure out how much tax you have to pay. If you don’t understand it, you may end up paying more tax than you have to.

What is Adjusted Gross Income (AGI)?

Adjusted gross income commonly known as AGI is your annual gross income after subtracting a few items. This exact number would determine how much you have to pay in tax. The Internal Revenue Service (IRS) will use all of the data to determine your income tax for the year and then give you an Adjusted Gross Income (AGI) number.

Depending on the percentage of your AGI, the IRS may make some personal deductions and also grant you some exemptions.

AGI can also affect your tax deduction and play an important role in your retirement plans.

The sum of all the money you have earned in a year that includes salaries, capital gains, dividends, interest, royalties, rental income, and retirement distributions is your gross income. However, AGI will make some adjustments to your gross income which is the sum of all the money to reach the number that will determine your tax payable for that particular year.

How to calculate your Adjusted Gross Income (AGI)?

Whether you run a successful business or consider yourself among independent contractors, you have to pay your taxes, so you have to calculate your adjusted gross income (AGI). After you have calculated the AGI, you will be able to determine your tax payable for the year. But the math seems a bit difficult. For your convenience, here we’ll share some tips on how to determine your adjusted gross income. So let’s get right to the point.

Before calculating your AGI, you need to analyze the items that must be filed for a tax return. This could include your property, your business, your royalties, your net income and many other things like that. If you are unsure of what to record, you can get help on the Internal Revenue Service (IRS) website. The IRS provides an interactive tax assistant who can answer your questions on the spot and help you with your tax filing process.

Steps to calculate your adjusted gross income (AGI)

To simplify the process, we have explained them in the form of several points here.

  1. To do your AGI calculation, you will need to determine your total gross income for the year. This could include your salary and other income from self-employment businesses, dividends, and retirement income.
  2. Having a list of all income is not enough, you must have tax returns for each income to prove that you are earning that much from one source. Have pay stubs produced by the payslip generator would suffice if they showed the name of the company.

Income can take the following forms:

  • Business income
  • Income by growing your own crops
  • Taxable refunds and local taxes
  • Disability benefits
  • Jury fees / compensation
  • Security deposits
  • Rental income
  • Prize / prize money
  • Play money /
  • Lottery
  • Make Money Through Lawsuits
  • Spousal support
  • Unemployment benefit
  • Capital gains
  • Union strike pay
  • Severance pay
  • Income from rental real estate partnerships or corporations, trusts and license payments
  • Royalties from your previous work, etc.
  1. Income earned from traditional wages and salaries should be reported on Form W-2, but if you earn income from a self-employment business, it should be reported on Form 1099.
  2. Form 1099 has a few sections to report different categories. Brokerage and barter expenses must be reported on Form 1099-B. Any proceeds from real estate transactions can be reported on Form 1099-S. Taxable interest can be declared on Form 1099-INT and all investment dividends can be declared on Form 1099-DIV. However, one thing needs to be clarified that all of these entries on Form 1099 are all part of your taxable income.
  3. Once all of your income is listed you need to add them all together and then you are allowed to subtract a few amounts that are not taxed. These revenues include:
  • Workers’ compensation benefits
  • Disability payments
  • Child support benefits
  • Host family payments
  • Life insurance proceeds
  • Money received as a gift
  • Inheritance of money or assets
  • Scholarships or scholarships
  • Retirement money
  1. Some of the winnings amounts are deductible and some of them are mentioned here.
  • Self-employment tax deduction

If you are self-employed and pay tax, then you will be eligible for a credit from the IRS by claiming the self-employment tax deduction.

  • Classroom expenses for teachers and educators

If you are a teacher, counselor, or assistant who teaches in a K-12 school, you can claim $ 250 for unreimbursed work-related expenses in each tax year.

  • Self-employed workers’ health insurance deduction

For the self-employed, they can cover the entire amount spent on premiums through the self-employed health insurance deduction. Sometimes these health insurances also cover your spouse and children.

  • Personnel enrolled in the armed forces

People who are drafted into the armed forces in any capacity are also entitled to some deductions. These can be related to early withdrawal penalty amounts, student loan interest, etc.

  1. Some people are confused between the modified AGI and the AGI. Just know that almost all independent adults are entitled to AGI and to pay taxes. However, for the modified AGI, you must be eligible for items such as contributions to Roth IRA and others.
  2. The IRS recommends that you do it yourself even if you are not eligible for any tax, as registering could give you credits and even benefits and it could be beneficial to you.

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Gross income vs. Net revenue

  • Gross income refers to total income which includes all income and sources of income.
  • Net income refers to net profit after deducting expenses.
  • Investors can use these numbers to examine a company’s profitability as well as their own profits.
  • Visit Insider’s Investment Reference Library for more stories.

When it comes to assessing income, you usually look at gross income and net income. These two numbers have important differences to consider, but can sometimes be confusing to understand. As an investor, these metrics can provide information about a company’s profitability as well as your own income.

Gross income vs net income: at a glance

Gross income and net income are two different measures that you can use to assess the profitability of a business. These numbers are also useful in assessing your own personal finances.

  • Gross revenue is the total income of a business which includes all income and sources of income.
  • Net income (NI) is sometimes referred to as net earnings and is total gross income less all expenses, taxes, and deductions.

Gross income is greater than net income and includes total income or income, while net income refers to net profits after deducting all expenses, taxes and deductions. For your net personal income which is generally your take home pay.

“Gross income is the total cash flow that a business generates from its sales, also known as turnover, and net income is the money that is left after a business has paid its bills and taxes.” explains James Diel, founder and CEO of Textel.

“Both of these numbers can help investors determine how risky a business investment can be,” continues Diels. “If a business is making a lot of money but having expenses that are too high to be profitable, that’s a problem. Conversely, if a business keeps costs relatively low relative to its income, it doesn’t mean much if it does. sells much less than slow growing products. “

What is gross income?

According to California State Franchise Tax Office, Business gross income refers to gross revenue, which includes total income from all sources such as sales of goods, provision of services and any other income-generating activity less costs of goods sold (COGS). Gross revenue refers to all income earned in a given tax year without any subtraction.

Gross income is a bit different for individuals, with the IRS indicating that gross income includes:

  • All your salaries
  • Business income
  • Dividends
  • Capital gains
  • Pension distributions and all other income

You may be familiar with the term Adjusted Gross Income (AGI), which is used on your tax return.

Gross income is important for businesses and individuals to understand the total of all sources of income and sales. It can offer an overview of the income produced over the course of a year and can be used as a benchmark when planning.

What is net income?

Net income is also sometimes referred to as net profit or net profit (all of these are synonymous) and is what is left over after taking all of the total income and subtracting the total costs of running a business. To calculate net income, you take gross income and subtract taxes and expenses, and also include depreciation and amortization.

Net income is also a relevant number for investors as it is used to determine a company’s earnings per share (EPS).

How investors use these numbers

Investors can use both gross income and net income to look at the overall performance of a business. Businesses typically create financial statements that share these numbers. Gross income or income is on the top line and net income or net profit is on the bottom line.

Using the Securities and Exchange Commission (SEC) EDGAR tool, you can look at a company’s financial statements to examine gross and net income. As an example, you can consult Amazon financial information.

As stated above, gross income can show growth and viability while net income can show overall profitability after expenses. If there are consistently large discrepancies between gross income and net income, this may be a warning sign.

“Startups are considered unprofitable by most accounting standards because they reinvest all profits back into their business,” says Asher Rogovy, chief investment officer at Magnifina. Sometimes that means ‘buying income’ with marketing dollars. Ideally, that income recurs and a new marketing budget is spent to find new customers. Therefore, it makes sense to analyze gross income to measure the rate of growth of the company. ”

Rogovy also suggests looking at the net income of established companies, as the primary goal is to pay dividends to shareholders, which are determined from net income.

Investors can look at the bottom line on a company’s financial statement, which is used to calculate EPS and illustrates how much a company earns for its common shareholders. Earnings per share is the net income or net profit of a company divided by the number of common shares.

The financial report

As an investor, it is important to look at gross and net income to assess the profitability and growth of a business. It’s also a way for you to look at your personal financial situation from a new perspective and help you budget your expenses and investments with your net income or take-home pay.

Just be aware of the limits of each number. Gross income can show the likelihood of growth but not the actual cost of running a business. Net income can illustrate net profit and give you a clear idea of ​​costs, but gives limited scope when assessing growth.

Both of these metrics can be used to assess which companies you want to invest in and can give you a nuanced look at your own personal finances.


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What is adjusted gross income and why does it matter?

Some technical terms that you have to deal with throughout your life can be difficult to understand. Some of the more common terms that appear primarily in relation to taxes include gross income, adjusted gross income (AGI), and modified adjusted gross income (MAGI).

The economy and your money: All you need to know
See:
Tax fraud and penalties for tax evasion explained

Knowing the difference between gross income and adjusted gross income will help you better understand how your taxes and finances work. And, once you understand this, you’ll be in better shape to navigate it all.

What is adjusted gross income?

Your gross income, according to the Internal Revenue Service, consists of all of your income from all sources. Gross annual income includes obvious sources of income, such as your wages, bonuses, self-employment income, and passive income, which includes rental income, capital gains, interest, and dividends.

So what is AGI? Your AGI is your gross income minus any income adjustments you claim on your tax return.

Read: National debt and deficit: what is it and how does it affect me?

How to calculate AGI

You don’t need an adjusted gross income calculator to determine your AGI. It’s very simple – for example, if your gross income is $ 47,000 and you claim $ 2,000 in income adjustments, your AGI is $ 45,000.

You will not find your AGI on your W-2, but you can find it on line 37 of Form 1040. Learning how to calculate your adjusted gross income allows you to determine which tax bracket you are in and what your federal tax rate will be.

To verify: How to Avoid Paying Taxes Legally – and the 11 Craziest Ways You Did It

What is an income adjustment?

An income adjustment is a tax deduction that you can claim whether you are claiming the standard deduction or itemizing your deductions. Sometimes income adjustments are called “above-line deductions” because they reduce your gross income even if you don’t itemize.

Expenses considered income adjustments include traditional IRA contributions, HSA contributions, interest on student loans, educator expenses, and any penalties you paid for early withdrawals from a CD. For example, if you made a deductible contribution of $ 1,500 to your traditional IRA and paid $ 500 in student loan interest, you would have $ 2,000 in income adjustments.

See: What to expect from an economic boom

What is modified adjusted gross income?

Different deductions and tax credits affect what the modified AGI means for everyone. For example, if you are calculating your MAGI to see if you are eligible to deduct your traditional IRA, you must first add back your IRA deduction, student loan interest, tuition fees, and several other adjustments to your income. However, if you are calculating your adjusted adjusted gross income to see if you qualify for the Lifetime Learning Credit, you do not have to add back the amounts you are claiming for IRA or interest deductions on them. student loans.

Read more: How Profit Estimates Impact Your Investments

Why are AGI and MAGI important?

The AGI and MAGI are important because many deductions and tax credits are only available if your AGI or MAGI falls below a certain number. Additionally, Social Security uses your adjusted gross income to help calculate how much of your Social Security benefits are taxable. Planning ahead can help you plan your expenses to get as much tax relief as possible and maximize your reimbursement.

This article is part of GOBankingRates’ “Economy Explained” series to help readers navigate the complexities of our financial system.

More from GOBankingTaux

Chris Jennings contributed to the writing of this article.

This article originally appeared on GOBankingRates.com: What is adjusted gross income and why does it matter?


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What is adjusted gross income and why does it matter?

By Posted on 0 Comments3min read1 views

Some technical terms that you have to deal with throughout your life can be difficult to understand. Some of the more common terms that appear primarily in relation to taxes include gross income, adjusted gross income (AGI), and modified adjusted gross income (MAGI).

The economy and your money: All you need to know
See:
Tax fraud and penalties for tax evasion explained

Knowing the difference between gross income and adjusted gross income will help you better understand how your taxes and finances work. And, once you understand this, you’ll be in better shape to navigate it all.

What is adjusted gross income?

Your gross income, according to the Internal Revenue Service, consists of all of your income from all sources. Gross annual income includes obvious sources of income, such as your wages, bonuses, self-employment income, and passive income, which includes rental income, capital gains, interest, and dividends.

So what is AGI? Your AGI is your gross income minus any income adjustments you claim on your tax return.

Read: National debt and deficit: what is it and how does it affect me?

How to calculate AGI

You don’t need an adjusted gross income calculator to determine your AGI. It’s very simple – for example, if your gross income is $ 47,000 and you claim $ 2,000 in income adjustments, your AGI is $ 45,000.

You will not find your AGI on your W-2, but you can find it on line 37 of Form 1040. Learning how to calculate your adjusted gross income allows you to determine which tax bracket you are in and what your federal tax rate will be.

To verify: How to Avoid Paying Taxes Legally – and the 11 Craziest Ways You Did It

What is an income adjustment?

An income adjustment is a tax deduction that you can claim whether you are claiming the standard deduction or itemizing your deductions. Sometimes income adjustments are called “above-line deductions” because they reduce your gross income even if you don’t itemize.

Expenses considered income adjustments include traditional IRA contributions, HSA contributions, interest on student loans, educator expenses, and any penalties you paid for early withdrawals from a CD. For example, if you made a deductible contribution of $ 1,500 to your traditional IRA and paid $ 500 in student loan interest, you would have $ 2,000 in income adjustments.

See: What to expect from an economic boom

What is modified adjusted gross income?

Different deductions and tax credits affect what the modified AGI means for everyone. For example, if you are calculating your MAGI to see if you are eligible to deduct your traditional IRA, you must first add back your IRA deduction, student loan interest, tuition fees, and several other adjustments to your income. However, if you are calculating your adjusted adjusted gross income to see if you qualify for the Lifetime Learning Credit, you do not have to add back the amounts you are claiming for IRA or interest deductions on them. student loans.

Read more: How Profit Estimates Impact Your Investments

Why are AGI and MAGI important?

The AGI and MAGI are important because many deductions and tax credits are only available if your AGI or MAGI falls below a certain number. Additionally, Social Security uses your adjusted gross income to help calculate how much of your Social Security benefits are taxable. Planning ahead can help you plan your expenses to get as much tax relief as possible and maximize your reimbursement.

This article is part of GOBankingRates’ “Economy Explained” series to help readers navigate the complexities of our financial system.

More from GOBankingTaux

Chris Jennings contributed to the writing of this article.

This article originally appeared on GOBankingRates.com: What is adjusted gross income and why does it matter?


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Net income vs gross income: what’s the difference?

  • Gross income is the total income from the sales of goods and services during a given period.
  • Net income is the profit that remains after deducting total expenses from gross income.
  • Understanding the difference between the two is essential to understanding the financial health of your business.
  • This article is for entrepreneurs who want to improve their accounting process and better understand the profitability of their business.

The net income of a business is its total profit over a period of time, while the gross income is simply the total of its sales over the same period. The difference between the net income and the gross income of a business is equal to the total of its expenses incurred during the period covered.

Editor’s Note: Looking for the right accounting software for your business? Complete the questionnaire below to have our supplier partners contact you regarding your needs.

Understanding the difference between net income and gross income is important because this is the only way small business owners understand how their business makes money, which affects budgeting and planning. Without distinguishing between net and gross, managers have no way of knowing whether their path to increased profitability involves increasing sales or reducing costs.

[Learn more about how accounting software can help you track your expenses and calculate your net income]

What is gross income?

Gross revenue is the amount a business realizes before it recognizes expenses, whether it’s the cost of goods sold directly attributable to a particular product or fixed expenses such as administrative staff salaries.

Essentially, a business’s gross income is equal to its total sales over a period of time.

Importance of gross income in the business

In managing their business finances, owners and managers need to periodically total their sales over different time periods, including weekly, monthly, quarterly, or annually. This allows managers to track the growth (or contraction) of their sales of various goods and services.

When business owners look at their income over different time periods, they should do so before deducting expenses. This is the only way they can track their sales over time, average sales size, and seasonality.

It is also important for managers to track employee sales quotas and productivity requirements to measure gross income. Gross income helps managers track a company’s sales volume, as opposed to profitability.

Example of gross income

Imagine a retail clothing store that sells $ 250,000 worth of clothing in a quarter. This $ 250,000, before expenses are deducted, is the store’s gross revenue for that quarter.

The gross income of a business is relatively simple. This is equal to the company’s total sales over a period of time. Gross income is extremely easy to report using any standard accounting software.

To remember : Gross revenue measures the total amount of revenue generated from sales during a given time period.

What is net income?

Net income is the amount of money a business earns over a period of time after accounting for all of its expenses incurred during that same period – it is profit as opposed to income. Without calculating net income, a business owner has no way of knowing if he has actually made or lost money over a period of time, no matter how much he has sold in property and in sales.

Importance of net income in the business

Net income is extremely important in measuring the profitability of a business; since it not only represents sales, but also costs incurred over the same period.

It is important for businesses to track net income in addition to gross income so that they can measure their profitability over time, as opposed to just their income (total sales). Determining net income also allows businesses to calculate their profit margin (net income as a percentage of gross income) – in other words, how much profit the business makes for every dollar of sales.

Most importantly, calculating net income helps managers and small business owners determine how to make their business more profitable and improve cash flow – by increasing sales or reducing expenses.

And – perhaps the MOST important – net income is an important metric for business owners to calculate and track because it is taxable.

Example of net income

Let’s continue with our example of the retail store with $ 250,000 in sales in a particular quarter. Now let’s say the items the store sold cost a total of $ 115,000 to buy (inventory cost). Let’s also say that the total cost of employee salaries during this period is $ 25,000, rent and utilities expenses were $ 15,000, and supplies and other miscellaneous expenses were $ 5. $ 000.

In this case, the store’s net income for that period would be $ 90,000 ($ 250,000 – $ 115,000 – $ 25,000 – $ 15,000 – $ 5,000). This is the amount of profit the store made in that quarter – the amount of money it made in that time period, minus all of its expenses.

This number is important at first glance because it tells store owners and managers how much money they made in the quarter, after spending. This is even more important when compared to net income from previous periods – the same quarter of the previous year, for example.

And net income is important because it allows store owners and managers to calculate their net profit margin. In this case, the store’s profit margin would equal $ 90,000 divided by $ 250,000, or 36%. This means that for every dollar in sales made by the store, it made a profit of 36 cents for the period.

Key to take awayTo remember : Net income measures profitability, by deducting total expenses from gross income to show the profit made by a business during a given period.

When to use net income versus gross income

Measure profitability

Gross income is a good metric that business owners can use to measure their total sales and track over time. It’s also good for determining their market share, as well as the trends and seasonality of their sales if certain months, quarters, or days of the week are stronger than others, for example.

Gross income is also good for business owners to gauge the effectiveness of their sales staff and set quotas and goals. But that doesn’t tell managers or owners if they’ve actually made or lost money over a period of time.

Net income, on the other hand, is a much better number for tracking a company’s profitability, or how much money the business is making (or losing) over given time periods. Net income doesn’t tell owners or managers if their sales are increasing or decreasing, but it helps them identify ways to improve their business (for example, by increasing sales or reducing expenses).

Calculation of profit margin

Net income is also better for businesses to use in calculating their profit margin, which they can track over time to see if the business is getting more or less profitable for every dollar it sells.

Valuing a company

And, finally, net income is also better for valuing businesses, determining a business’s creditworthiness for obtaining a loan, and making investment or hiring decisions.


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IRS: Texas Increased Taxpayers by 114K, $ 4 Billion in Gross Income | Texas

(The Center Square) – Texas welcomed new residents of all ages and income in the years leading up to the COVID-19 pandemic, according to recent data from the Internal Revenue Service (IRS).

Data was collected for the 2018 and 2019 tax years, which means it represents the 2017 and 2018 tax returns. The data reflects migrant taxpayers who paid taxes in another state or county during from the same period.

Between the 2018 and 2019 tax years, the Lone Star state added a net of 114,194 new taxpayers and dependents to the state. This total was over $ 4 billion in adjusted gross net income.

Over 72,000 Californians deceased the west coast of Texas, according to data.

IRS data adds to a trend that Texas is increasingly becoming a destination for businesses and real estate owners.

In September, Governor Greg Abbott’s Office of Economic Development reported a “considerable increase” in relocations of companies to the state since the start of the pandemic.

Late last year, software company Oracle finalized its move to Austin. It wasn’t long after that Tesla announcement he was going to build a gigafactory in the state. Apple also decided to build a campus in Austin.

The US Census Bureau also reported that Texas has grown much faster than California over the past decade. Even though California is still the most populous state in the country, Texas added nearly twice as many residents as the Golden State between 2010 and 2019.

Texas Public Policy Foundation vice president Chuck DeVore wrote in an editorial for Fox News that the phenomenon is a sign that lowering taxes are in fact encouraging growth.

“If California’s anti-employment policies, high taxes, capricious regulatory enforcement, and blackout-inducing energy policies can drive out the company that started Silicon Valley, can a company, big or small, is safe from the pressures to move? ” he wrote.

“Unless a business has to serve the California market directly, like a fast food restaurant chain, the answer is a definite no!

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IRS: Texas Increased Taxpayers by 114K, $ 4 Billion in Gross Income | Texas

(The Center Square) – Texas welcomed new residents of all ages and income in the years leading up to the COVID-19 pandemic, according to recent data from the Internal Revenue Service (IRS).

Data was collected for the 2018 and 2019 tax years, which means it represents the 2017 and 2018 tax returns. The data reflects migrant taxpayers who paid taxes in another state or county during from the same period.

Between the 2018 and 2019 tax years, the Lone Star state added a net of 114,194 new taxpayers and dependents to the state. This total was over $ 4 billion in adjusted gross net income.

Over 72,000 Californians deceased the west coast of Texas, according to data.

IRS data adds to a trend that Texas is increasingly becoming a destination for businesses and real estate owners.

In September, Governor Greg Abbott’s Office of Economic Development reported a “considerable increase” in relocations of companies to the state since the start of the pandemic.

Late last year, software company Oracle finalized its move to Austin. It wasn’t long after that Tesla announcement he was going to build a gigafactory in the state. Apple also decided to build a campus in Austin.

The US Census Bureau also reported that Texas has grown much faster than California over the past decade. Even though California is still the most populous state in the country, Texas added nearly twice as many residents as the Golden State between 2010 and 2019.

Texas Public Policy Foundation vice president Chuck DeVore wrote in an editorial for Fox News that the phenomenon is a sign that lowering taxes are in fact encouraging growth.

“If California’s anti-employment policies, high taxes, capricious regulatory enforcement, and blackout-inducing energy policies can drive out the company that started Silicon Valley, can a company, big or small, is safe from the pressures to move? ” he wrote.

“Unless a business has to serve the California market directly, like a fast food restaurant chain, the answer is a definite no!


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Taxpayers Fleeing Blue States Bring $ 26.8 Billion in Gross Revenue to Red States

IRS state-to-state data tracking migration shows that the blue states saw a net outflow of hundreds of thousands of taxpayers who took nearly $ 27 billion in gross taxable income with them in the Red States.

The most recent IRS migration data shows that during the years 2017-2018, 399,892 net taxpayers and their dependents left the Blue States, defined in this case as those in which the State House and Senate are controlled by the Democrats.

The figures are based on 2018-2019 tax returns and tax exemptions, reflecting the flows of people from state to state in 2017-2018. The IRS views tax returns as a proxy for households, while exemptions are a good approximation of the number of individual taxpayers and their dependents.

The nearly 400,000 taxpayers and dependents – just over 0.1% of the US population – who left the Blue States took with them $ 26.8 billion net of adjusted gross income taxable to the Red States.

Democrat-controlled California (167,563), New York (153,970) and Illinois (82,107) accounted for most of the exodus, followed by New Jersey (26,853), Massachusetts (26,086) and Maryland (15,916).

The main beneficiary of the exit from the Blue State was GOP-controlled Texas, which saw a net influx of 114,818 taxpayers and their dependents, as well as an increase in gross income of nearly $ 4 billion. .

Interstate migration flows are influenced by a number of factors, including crime rates, employment opportunities and housing costs. A routine Census Bureau survey asks people who travel any distance the main reason for their decision to move, including employment, housing, going to college, crime, or to join a loved one.

The most popular picks in 2019-2020 (xls), ranked by popularity, were “looking for a newer / better / larger house or apartment”, followed by “new job or job transfer”, “to establish own household”, “other family reason “, Rent” and “wanted cheaper housing”.

The least popular responses were “natural disaster,” “climate change,” and “foreclosure or eviction,” with “better neighborhood / less crime” somewhere in the middle.

Although taxes are not part of the Census Bureau survey, a 2018 Analysis by the Cato Institute, a libertarian think tank, argued that taxes influence migration, and said tax incentives could be inferred from some of the Census Bureau survey responses.

“The Census Bureau does not ask movers about taxes. But some of the 19 choices may reflect the influence of taxes, ”the institute wrote in the analysis. “For example, people moving for housing reasons may consider the level of property taxes, as these taxes are a standard item listed on home sale notices. Likewise, people who move for a new job may factor in the effect of income tax if they move, for example, between a high-tax state like California and a state without income tax. like Nevada.

Nevada was one of seven blue states that saw a net influx of people, welcoming 31,238 taxpayers and their dependents, as well as just over $ 2 billion in gross income. Most of the people who moved to Nevada were from California.

According to the report of the Tax Foundation state-local tax burden analysis, blue states generally have a higher effective local tax rate than red states.

A Recent Rasmussen poll showed that a majority (55%) of likely voters nationwide prefer a smaller government with fewer services and lower taxes.

To follow

Tom Ozimek has extensive experience in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he’s ever heard is from Roy Peter Clark: “Hit your target” and “leave the best for last”.


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California loses 300,355 taxpayers and $ 12 billion in gross revenue to other states since 2017

It’s no secret that Californians are leaving the state in droves. Some are political refugees exhausted by the one-party Democratic regime. Others are economic refugees, seeking lower taxes and a more acceptable cost of living.

A new report by The Center Square provides details:

The Internal Revenue Service recently released its latest taxpayer migration figures for the 2018 and 2019 tax years. They reflect migrant taxpayers who filed in another state or county between 2017 and 2018, including 8 million did so during this period. “

“California, the most populous state in the country, has lost more filers and dependents on the net than any other state.”

“Minus inbound filers, California lost 165,355 net filers and dependents between the two tax years, representing a loss of $ 8.8 billion in adjusted gross net income.”

“From July 2019 to July 2020, the Census Bureau estimated that 135,000 more people left the state than they moved in. “

California legislative analyst reported last year that for many years more Californians left for other states than moving here. According to data from the American community survey, from 2007 to 2016, approximately 5 million people moved to California from other states, while approximately 6 million left California. On the net, the state has lost 1 million inhabitants due to internal migration, or about 2.5% of its total population.

Official U.S. Census figures were released recently, showing California will lose a seat in Congress and an electoral vote due to a massive slowdown in population growth, The Globe reported in April.

Now we’re starting to see an out-migration from major cities in California to smaller towns and villages, and to the state’s rural counties – if they even choose to stay in California.

We know why California companies go to other states: Chief Executive magazine reports year after year that when CEOs across the country are polled, they name California as the worst state in the country in which to do business. California has the highest taxes in the country, one of the highest tax climates for businesses, with the Tax Foundation ranking California 49th – the second worst in the country, ahead of New Jersey.

The Place du Center continues:

“Texas was the number one destination for Californian expats, with 72,306 total exemptions leaving to get there. Neighboring Arizona saw a total of 53,476 filing exemptions from California. The two states saw their gross revenues increase by $ 3.4 billion and $ 2.2 billion, respectively. “

California’s income tax rate of 13.3% is the highest marginal tax rate in the country. And when you add up to 37% federal taxes, living in California is expensive right off the bat, and especially now that we can’t deduct state taxes from the federal government.

With the statewide lockdown still partially in place, with schools closed or partially open, and businesses closed for 15 months, add to the spike in violent crime across the state … expect to see more people reach a tipping point and make the decision to move to another state.


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