By Andrew Schwartz, CPA
Last month, Presidential Candidate Mitt Romney released his 2011 and 2010 tax returns to the public. You can download a complete copy of these federal tax returns at:
Here is a continuation of what I observed upon reviewing his returns (Read Part 1):
- The total 2011 tax liability reflected on this tax return is $3,226,623 – or just over 15% of his gross income of $20,908,880. This might seem quite low, but he claimed a substantial deduction of $4,020,572 for donations to charities. Without his charitable donations, his total federal tax liability would have been approximately $4.6 million, or 22% of his gross income.
- The total 2010 tax liability reflected on this tax return is $3,009,766 – or just under 14% of his gross income of $21,646,507. This might also seem very low, but he claimed substantial donations to charities of $2,983,974. He also saved taxes by taking a $129,697 credit for Foreign Taxes paid during the year. Without these two tax breaks, his total federal tax liability would have been approximately $4.2 million, or 19.5% of his gross income.
- The Romneys claimed itemized deductions of $5,688,179 on their 2011 Schedule A and $4,519,140 on their 2010 Schedule A. For 2011, their itemized deductions include: $4,020,572 of charitable donations, $46,033 in investment interest expense, $226,356 in real estate taxes, and $1,323,094 in state income taxes. They also claimed $490,000 in Miscellaneous Itemized Deductions that were passed through to him by one of his investment trusts or partnerships, of which only $71,978 was deductible since Miscellaneous Itemized Deductions are only allowable to the extent they exceed 2% of your income.
- Finally (and surprisingly), Mitt Romney had a sizeable capital loss carryover reported on 2010 Schedule D. Take a look at line 14 of that year’s Schedule D and you’ll see that he went into 2010 with a capital loss carryover of $4,844,089. His returns don’t indicate when or how those losses arose.
Extremely Complicated Return
These tax returns are anything but straightforward. In my office, we don’t prepare any returns nearly as involved as Mitt Romney’s 2011 and 2010 returns. I can only imagine how many hours the staff of PriceWaterhouseCoopers spent on preparing and reviewing these tax returns.