From staff reports

Last week, the Spokesman-Review published a package outlining how President Donald Trump’s proposed tax reform might impact Spokane families.

The information in the article was accurate, but the accompanying calculator and graphic were unintentionally misleading about the possible impact the plan might have on low-income families, specifically by showing a family of four making between $18,000 and $50,000 per year likely would be worse off under the broad outlines offered in Trump’s proposal.

While the tax reform plan is a rough outline and lacks many specific numbers, the scenario presented did not account for tax credits which significantly change the tax liability of low-income families. This omission was an error on our part.

Household of four with home How might President Donald Trump’s proposed tax reforms affect you and your family? We chose four household income levels that fall into the proposed tax brackets. Each is based on a household with two people filing jointly with two dependents entered into The Spokesman-Review’s tax calculator, which takes into account other variables.

We want to set the record straight with this explanation. We’ve updated our online tax calculator to present more accurate information about tax credits, and we’re replacing the original graphic with a corrected one showing a more accurate estimate of tax liability.

Income tax liability calculator Updated 12/20/17 This calculator is designed for people who take the standard deduction on their taxes based on income from a job or W2. We’ve factored in the earned income tax credit and child tax credit, but no other credits or deductions. Under current law and the new tax bill, you can deduct up to $2,500 of student loan interest off your taxable income. If you take this deduction, subtract that amount before entering your total income. How did you file your return last year? Single Joint (married couple) Head of household Income Enter your total annual income, either for yourself or you and your spouse. If you contributed to a 401(k) or other tax-free retirement account, include your income after those deductions. Don’t worry, we don’t store any of this data!

Next Were you claimed as a dependent last year? Yes No

Next How many dependents (like children), did you claim on your taxes? Enter 0 for none. How many of these dependents were your children who were either: a) under 19 on the last day of last year b) were full-time students under 24 on the last day of last year? Enter 0 for none.

Next How many of these dependents were your children who were under 17 at the end of last year? Enter 0 for none.

Next NOT your children How many of your dependents wereyour children Enter 0 for none.

Next Reset This calculator factors two of the most common tax credits taken by low income families: the Earned Income Tax Credit and the Child Tax Credit. We’ve added the new family tax credit included in the tax bill. Any other credits you’ve taken on your taxes will affect the accuracy of these numbers. If you receive a credit for eligible tuition expenses, that number would be subtracted from your total tax bill under both current law and under the new tax plan. The individual tax portions of the bill, including higher standard deductions and lower tax rates, are set to expire in 2025. After that, your taxes should look something like they do now. For the sake of simplicity, we’ve assumed all income you entered at the top is earned income, rather than income from sources like social security. If your income is from a source other than a job, it might affect your eligibility for these credits.

A married couple with two children making $18,000 per year would owe nothing in taxes under current law, and also nothing under Trump’s plan. Our calculator inaccurately presented tax liability in negative numbers rather than simply reporting it as $0.

More importantly, that family would also be eligible for two large tax credits that would entitle them to a refund. The first, the earned income tax credit, pays low-income families on a sliding scale based on their income and the number of children they have.

The EITC is refundable, meaning that if the amount of the credit is more than the total taxes a family owes, the family gets a check back from the Internal Revenue Service.

A family with two children earning less than $50,198 is eligible for a credit of up to $5,572, with the amount of the credit increasing as income lowers. To be eligible, a family must have income earned from work or a handful of other sources.

The current Trump proposal did not outline any changes to the EITC, which has historically enjoyed bipartisan support. With no changes, our hypothetical family making $18,000 would receive the full $5,572 credit.

The Republican plan would also increase the child tax credit, leaving $1,000 of it refundable as under current law. Because our hypothetical family owes no taxes, the amount of their refund would still be $2,000, which is $1,000 for each child.

Our second scenario involved a family of four making $50,000 per year. Our graphic suggested that family’s taxes would increase by $883 under the Trump plan, but that assumption only holds with no change in the child tax credit. That family would also be eligible for a small EITC of $36 under both plans.

The Trump outline did not include a specific increase in the child tax credit, but the 2016 Republican tax plan suggested raising it to $1,500 per child.

Using that GOP plan scenario from last year, that change would make this family eligible for a $3,000 tax credit, reducing their tax bill to just $84 with the EITC. Under existing law, they’d receive a credit of $2,000 and pay about $202 in taxes.

The two more prosperous families we included, making $160,000 and $500,000 per year, respectively, would not be eligible for the EITC. The family earning $160,000 might be eligible for a smaller child tax credit under the Republican plan, but the highest earning family would be excluded on the basis of income.

We failed to be clear with readers about the assumptions we were making and as a result, left an inaccurate impression of the likely impact of the plan. This was unintentional and once the mistake was realized, we made and published corrections immediately.

The Spokesman-Review is committed to continuing to report on tax reform as it moves through Congress, and will update the online calculator to keep track of what the latest changes may mean for readers.