Saturday, August 23, 2008

Unfortunate Knowledge

Today I learned that not only are scholarships, fellowships, and the like in no way exempt from income tax in the US (unlike in Canada), but that there is no basic minimum deduction built in to the US tax code.

It seems ridiculous that someone earning $9342 would be on the hook for $1000 in federal income tax. (Base for author's calculations.) The figure for Canada is $16,267 - not including the fact that scholarships get some tax protection back home.

Clearly there's something I'm missing here, since I'm sure that nowhere near that amount is remitted to the IRS by people earning that little. The Earned Income Tax Credit explains those with children.

Anyway, looks like I'm going to end up unwillingly contributing far more to the American government than I ever gave to Ottawa - not that the latter was much larger than epsilon.

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