Here’s the formula for paying no federal income taxes on $100,000 a year

The question of how much can we earn without paying federal income taxes is relatively easy to answer for most people.

The standard deduction for a married couple is $24,400 in 2019 (if both are under 65 years old), and the top of the 0% capital-gains tax bracket is $78,750. So we can make a total of $103,150 a year, provided that our ordinary income stays below the standard deduction and the rest comes from long-term capital gains and/or qualified dividends.

Those who aren’t married should halve these dollar amounts. Note that the IRS is increasing these numbers slightly for 2020.

With our daughter, we also qualify for the child tax credit ($2,000), so we could actually generate another $13,333 per year in dividends or capital gains, taxed at 15%. The tax liability of $2,000 exactly offsets the tax credit, for a federal tax bill of zero.

Once people file for Social Security benefits, though, things become a bit more complicated. That’s due to the convoluted formula used to determine how much of your Social Security is taxable income. So calculating and plotting the tax-free income limits is…