What taxpayers can learn from the Biden, Harris 2023 tax returns

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What taxpayers can learn from the Biden, Harris 2023 tax returns

President Joe Biden and Vice President Kamala Harris deliver remarks about healthcare in Raleigh, North Carolina on March 26, 2024.

Peter Zay | Anadolu | Getty Images

President Joe Biden and Vice President Kamala Harris have released their annual tax returns, and there are lessons within for average Americans, according to tax experts.

The president and first lady Jill Biden

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a ****** adjusted ****** income of $619,976 for 2023, which was 7% higher than 2022. They paid federal income taxes of $146,629 and their effective tax rate was 23.7%.

Vice President Kamala Harris and her husband, Douglas Emhoff,

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an adjusted ****** income of $450,299, which was slightly lower than their 2022 earnings. Their federal taxes were $88,570 and their effective tax rate was 19.7%.

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Interest income can be a ‘big surprise’

In 2023, both couples earned most of their income from salaries, with federal and state taxes withheld from employers.

Both couples also had interest income, which can cause a “big surprise” at tax time, without increased

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That’s why investors need to track taxable activity — such as dividends or fund distributions — in brokerage accounts, said Silversmith, who is also a certified public accountant.

While both couples made extra tax payments, they each incurred a small

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, based on underpayments from each quarterly deadline and interest. The Bidens paid a penalty of $285, while Harris and her husband owed $451.

Tax planning for self-employment income

Over the years, the Bidens have reduced self-employment taxes by receiving some wages through their companies, which are structured as S-corporations.

After paying “reasonable compensation” to shareholders, S-corporation owners can take distributions without paying 15.3% for Social Security and Medicare taxes.

While the couple only made $4,115 in royalties for 2023, the structure has previously offered significant savings for the couple’s 

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However, working-age taxpayers with self-employment income would need to consider how lower wages could impact future Social Security income, said CFP Catherine Valega, founder of Boston-based Green Bee Advisory, who is also an enrolled agent.

Why that matters: The calculation for Social Security benefits uses up to 35 years of wages to calculate the monthly payments, she said.

Work with a tax professional

Typically, filers

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When filing returns, “plus or ****** $500 [for a refund or balance] is magical,” said Valega. “Both of them were spot on with that.” 

If you’re a higher earner with “a little bit of complexity,” such as multiple sources of income, she recommends working with a tax professional to “***** into each piece of the pie.”

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Income Tax,Tax bill,Tax refunds,Taxes,National taxes,Personal saving,Wealth,Tax planning,Government taxation and revenue,Personal finance,Joe Biden,Kamala Harris,business news
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