21.7 C
Munich

Bidens’ Taxable Income Came to $607,336 in 2020, Returns Show


WASHINGTON—President Biden and his wife, Jill Biden, made $607,336 in adjusted gross income in 2020 as he ran for office, according to tax returns the couple released Monday.

On the day that Americans must pay their 2020 taxes or seek an extension—delayed from the usual April 15 due to the coronavirus pandemic—the couple resumed the voluntary disclosure tradition that President

Donald Trump

broke during his term. The Bidens’ returns showed declining income from 2019 and much smaller use of a tax strategy that the Biden administration wants to eliminate.

The Bidens’ 2020 income came primarily from pensions, Social Security benefits and Dr. Biden’s speaking and writing engagements. The couple donated $30,704 to charity and paid $157,414 in federal income and self-employment taxes, or 25.9% of their adjusted gross income. They would pay more under Mr. Biden’s tax proposals, which would raise the top individual tax rate to 39.6% from 37%.

After Mr. Biden left the vice presidency in 2017, the couple routed their speech and writing income through S corporations. That move meant that the couple avoided Medicare taxes totaling 3.8% on much of their income, saving them as much as $500,000 in 2017 and 2018.

Legally, S corporations are supposed to pay only reasonable compensation to their owners equivalent to the market rate for such services. That compensation would face payroll taxes, and any remaining profits would be considered active business income outside the payroll tax or an equivalent 3.8% tax on investment income.

That rule is designed to prevent people from turning labor income taxed at higher rates into business profits taxed at lower rates, and the IRS often gets in disputes with taxpayers about what reasonable compensation would be. A gap between reasonable compensation and business profits is harder to justify when the business is driven largely by the S corporation owner’s work.

In 2017 and 2018, the Bidens’ S corporations reported more than $13 million in profits and paid the couple less than $800,000 in salary. In 2019, they generated about $229,000 in profits and paid the couple about $309,000. In 2020 that flipped, and they reported less than $100,000 in profits while paying Dr. Biden $200,000 in wages.

During the 2020 campaign, Mr. Biden proposed a series of tax increases on high-income households, but he didn’t call for expanding existing 3.8% taxes on top earners’ investment, wage and self-employment income to active profits of S corporations. It was one of the few Obama administration tax-increase proposals Mr. Biden didn’t adopt or expand.

Last month, however, his administration said such income above $400,000 would face a 3.8% tax, noting that for the existing tax, “the application is inconsistent across taxpayers due to holes in the law.”

The Bidens paid significantly more for household help in 2020, spending more than $95,000, up from $57,000.

The Bidens’ disclosure marks a return to how presidents handled their tax returns for four decades before Mr. Trump took office.

During the 2016 campaign and during his presidency, Mr. Trump repeatedly said he would release his tax returns but ultimately refused to do so. His administration fought a request from House Ways and Means Committee Chairman

Richard Neal

(D., Mass.), who sought the returns under a piece of the tax code that says the Treasury Department “shall furnish” anyone’s returns to the chairman.

That dispute landed in federal court—and remains there. The Biden administration hasn’t reversed the Trump administration’s legal conclusion that such a handover wasn’t required. The administration and the Ways and Means Committee recently told a federal judge that they have been discussing the issue.

Mr. Trump sometimes said he would release his returns after audits were complete. The IRS automatically audits presidents and vice presidents. Mr. Biden released his returns before that audit, and an audit wouldn’t affect future releases, said White House press secretary

Jen Psaki.

“We will continue to release the president’s tax returns, as should be expected by every president of the United States,” she said Monday.

Vice President

Kamala Harris

and her husband, Douglas Emhoff, also released their 2020 tax returns. They reported $1.7 million in adjusted gross income, mostly from his work as a lawyer.

Write to Richard Rubin at richard.rubin@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here