Summary: Bentley mixes “income” with “taxable income,” which can be very different things. In his case last year, they were. Bentley claimed $340,698 in total income on his 2009 federal tax return, which he has posted on his website. After deductions, however, his taxable income was just $48,323. Bentley paid $4,884 in federal taxes, and $10,275 to the state.
Analysis: Thanks to voluminous federal and state tax codes, income can be a tricky thing. Accurate and legal assertions of income can vary between the federal and state tax returns, sometimes wildly.
Bentley, who retired in May 2009 from his dermatology practice to run for governor, had an income of $340,698 in 2009. Of that, however, only $112,943 is counted in his federal tax form as income because he was allowed to subtract about $120,000 in a real estate loss, along with another $99,000 from pension and annuities that aren’t taxable. He also didn’t have to pay taxes on about $3,200 in dividends and about $5,200 in Social Security benefits.
Beyond that, Bentley took deductions for $15,159 in charitable donations, interest payments and unpaid mileage he rang up as a legislator. That brought his federal taxable income down to $48,323. On that income, Bentley owed $4,884. Since he had paid $24,739 throughout 2009 either in work deductions or quarterly estimated tax payments, Bentley got a tax refund of $19,855.
For his state taxes, Alabama didn’t allow all the deductions and exemptions the federal government let pass, so his state income was $206,940. With state deductions, Bentley’s taxable income in Alabama was $151,630. On that, Bentley owed $7,500, but he had already paid $10,275 to the state. His state tax returns shows he did not seek the $2,775 refund, instead donating it to the state.
As for Sparks, the total income reported on his federal form was $74,139 in 2009. Of that, $63,196 was taxable. He owed $11,981 and had already paid $14,133. He got a federal tax refund of $2,152.
In Alabama, Sparks’ taxable income was $50,093. He owed $2,463, and had already paid $2,759. His tax return shows he applied for the $296 tax refund from the state.
Counting the overpayment of taxes Bentley let the state keep, he paid $15,159 in income taxes to the state and federal government. Sparks paid $14,444 to both governments.