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

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 reported a joint adjusted gross 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, showed an adjusted gross 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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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 paycheck withholdings or quarterly estimated tax payments, explained certified financial planner David Silversmith, senior tax manager at Eisner Advisory Group in New York.

While both couples made extra tax payments, they each incurred a small estimated tax penalty, based on underpayments from each quarterly deadline and interest. The Bidens paid a penalty of $285, while Harris and her husband owed $451.

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 book deals and speaking gigs.  

Typically, filers get a tax refund when they overpay levies throughout the year. Conversely, there’s generally a tax bill when filers don’t pay enough. Both tax returns showed the couples were fairly close on total taxes paid vs. owed.