Out of the 3.9 million households that reported an adjusted gross income of $200,000 or more in 2009, more than 10,000 households paid nothing in taxes, according to a new study from the Internal Revenue Service.
How'd they do it? According to the study, nearly one-third of the high-income returns used miscellaneous deductions such as non-reimbursed employee expenses. Other big reasons for deductions included charitable contributions, medical expenses, and losses related to an incorporated small business.
"High-income returns are more often nontaxable as a result of a combination of reasons, none of which, by itself, would result in nontaxability," said the study.
The Buffett Rule, a proposal from President Barack Obama, could change that. The proposed rule would impose a 30 percent minimum tax rate on high earners, which could limit some of the deductions that the rich use to reduce their tax load.
The new study's data from 2009 also reflects a dip in earnings from 2008, likely related to the financial crisis and recession. The total number of taxpayers who reported making an income of more than $200,000 dropped by more than 11 percent between 2009 and 2008.
Using the tax code to your advantage a la Mitt Romney has been a hot topic this year, as the fairness of the U.S. tax code continues to be scrutinized. Loopholes and various caveats in the tax code have spurred a cottage industry for tax experts and accountants who offer advice on how to make tax bills cheaper.
Tax experts are already looking ahead to 2012 taxes, when the tax burden to some Americans could change significantly with the expiration of a number of tax cuts and other temporary tax reductions.
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