Tax return is nearly $3000 LESS because I worked part-time last year!

[Acklander]

It's not welfare but it is an entitlement. And unlike the other tax credits you listed, the EIC is a refundable tax credit, which means that you can actually get back more than you paid in federal income tax. The other taxes you mention cannot exceed the amount that you paid in. I would have no problem with the EIC if it were not completely refundable.

I don't buy into the argument that it is a refund of additional taxes paid. Social Security taxes should be "paid" back when you retire. Sales taxes are collected by the states and not the federal government. Only some excise taxes are federal in nature. Plus there is no way to quantify how much the individual tax payer actually paid in those excise taxes since many are hidden in the cost of the product being consumed.

No, they don't know how much you pay on additional taxes which is why they pro-rate it based on averages. Just like when you write off your car mileage, it's based on a pro-rated amount of the averages for gas/insurance/wear & tear.

What I've never understood is with all the tax credits out there why everyone fixates on the one tax credit that is offered for the WORKING poor. It's seems everyone is able to justify the credits they personally receive, but the working poor are an easy target because they're not "paying their fair share". Maybe if companies paid a fair wage, this wouldn't be an issue.

If I'm going to get upset about a tax credit, I'll save my anger for the credits given to big businesses to ship the jobs over seas, not on the person who's scrubbing toilets at the corporate offices.

 

[wide awake]

The EIC is for the working poor, and like many entitlements is for those that really need it. If the OP can make money than she should do so. If it cuts down on her EIC that is a good thing for all of us, and for her in the long run. Who wants to live forever on a handout ? I like EIC for those that need it, but I abhor the OP's reasoning. She should be happy and proud of herself that she and her family are more independent.

 

[fakereadhed]

OP is a worker venting about how the system is broken and doesn't encourage employment. Everyone that is angry about that should elect people that want to fix it, not shoot the messenger.

 

[Acklander]

The EIC is for the working poor, and like many entitlements is for those that really need it. If the OP can make money than she should do so. If it cuts down on her EIC that is a good thing for all of us, and for her in the long run. Who wants to live forever on a handout ? I like EIC for those that need it, but I abhor the OP's reasoning. She should be happy and proud of herself that she and her family are more independent.

It's not a hand out. It's a tax credit. When you file your taxes do you consider any deductions or credits you may qualify for to be a hand out???

 

[Marionnette]

No, they don't know how much you pay on additional taxes which is why they pro-rate it based on averages. Just like when you write off your car mileage, it's based on a pro-rated amount of the averages for gas/insurance/wear & tear.

What I've never understood is with all the tax credits out there why everyone fixates on the one tax credit that is offered for the WORKING poor. It's seems everyone is able to justify the credits they personally receive, but the working poor are an easy target because they're not "paying their fair share". Maybe if companies paid a fair wage, this wouldn't be an issue.

If I'm going to get upset about a tax credit, I'll save my anger for the credits given to big businesses to ship the jobs over seas, not on the person who's scrubbing toilets at the corporate offices.

Personally, I don't care for ANY tax credits. I would love to see a flat personal income tax rate and a VAT tax on non-necessities (iow - tax ipods but not pea pods). But too many special interests on both sides of the spectrum have always opposed those ideas.

 

[DVCBELLE]

OP is a worker venting about how the system is broken and doesn't encourage employment. Everyone that is angry about that should elect people that want to fix it, not shoot the messenger.

I agree - it is a flaw with the system.

My family comes nowhere close to qualifying for the EIC so it is never an incentive to stay home...but making a small salary would knock us into a higher tax bracket. And there have been me times we have actually discussed that my DH taking a job that would require more hours - be a small salary increase but jump us into a higher tax bracket just isn't worth it.

The system is broken - it does NOT encourage people to work harder or produce more b/c if you do - the government will take the money and give it to someone on welfare. To be honest - the EIC bothers me less than flat out welfare...at least you have to be working to earn it!!

 

[Acklander]

Personally, I don't care for ANY tax credits. I would love to see a flat personal income tax rate and a VAT tax on non-necessities (iow - tax ipods but not pea pods). But too many special interests on both sides of the spectrum have always opposed those ideas.

Exactly

 

[Acklander]

My family comes nowhere close to qualifying for the EIC so it is never an incentive to stay home...but making a small salary would knock us into a higher tax bracket. And there have been me times we have actually discussed that my DH taking a job that would require more hours - be a small salary increase but jump us into a higher tax bracket just isn't worth it.
!

It wouldn't knock you into a higher tax bracket. Only the amount in the next tax bracket gets taxed at the higher rate, the bottom part would still be at the old rate. Example: if the next tax bracket was at 50,000 and your husband makes 40,000 and you're offered a job that pays 20,000. 50k would pay taxes at the lower rate, with 10K at the higher rate. It wouldn't knock your entire paycheck into the higher bracket.

 

[SaraJayne]

I think this thread is a sad commentary on society's general perception of stay at home parents.

We don't qualify for the EIC, but I've never seen it as "welfare". It's a tax credit, allowed by US tax law. If you're qualified for it, you're entitled to claim it.

 

[crashbb]

It wouldn't knock you into a higher tax bracket. Only the amount in the next tax bracket gets taxed at the higher rate, the bottom part would still be at the old rate. Example: if the next tax bracket was at 50,000 and your husband makes 40,000 and you're offered a job that pays 20,000. 50k would pay taxes at the lower rate, with 10K at the higher rate. It wouldn't knock your entire paycheck into the higher bracket.

Yay, I never get it when people say that they cannot do something or they'd lose money by doing it, because it would move them into another tax bracket. Sure, they're marginal tax bracket may change, it isn't like all of their income is taxed at the marginal rate.

*Marginal rate is the highest tax rate you pay, essentially the tax rate for your last dollar of income (not sure if this is just a Canadian term)

 

[DVCBELLE]

It wouldn't knock you into a higher tax bracket. Only the amount in the next tax bracket gets taxed at the higher rate, the bottom part would still be at the old rate. Example: if the next tax bracket was at 50,000 and your husband makes 40,000 and you're offered a job that pays 20,000. 50k would pay taxes at the lower rate, with 10K at the higher rate. It wouldn't knock your entire paycheck into the higher bracket.

I get that...but it is still a consideration and is something we always take into account. The tax bracket would be high enough that I don't want my husband busting his butt to give a good chunk of the money back to the government - trust me they get enough of our money as it is!!!

 

[ccgirl]

Another way to look at it is that if you have $3,000 left that is $3,000 more than you had before.

Believe me, I don't think taxes are always fair. Part of my taxes go to the public schools. Yet, my children don't go to public school. We pay so much money in taxes and are lucky if we get anything back. We actually come out pretty even which means we are taking the correct number of deductions.

Good luck with your decision.

 

[mrodgers]

Personally, I think it's unfair that homeowners get to write off all that interest paid to the bank from their income, where as renters don't get that write off. so, you've got 2 people who make the exact same income, same amount of kids, but the homeowner pays much less in taxes than the renter - even if they pay the same amount in housing expenses; but we don't call that "welfare". Why is that?

This is wrong. Not all homeowners can deduct their interest. Only McMansion owners. I get $11,400 standard deduction same as a renter does. I pay interest on my home loan, but I'd have to pay to the tune of about $10,000 in interest to itemize, not the $1500 I do pay.

But how do you make people pay more in wages? If a working mom has 2 or 3 kids in childcare, and the mom has no marketable skills to obtain higher wages, there is simply no way to earn the income needed.

Why does no one realize that there are 24 hours in a day. Both my wife and I work, we have 2 kids, and there is one parent home at all times with the kids. I work during the day and my wife works during the evenings. She is there for when they are off school, sick, and the summers and I am there in the evenings. You don't need daycare for both parents to work.

 

[wvjules]

I got EIC for years! The first year I didn't qualify for it I was tickled. You know why? Because I was bettering myself and didn't need that 'handout' any more. I was better off in the the long run NOT qualifying for EIC. Who cares that my REFUND went down. I worked hard to get where I am and don't ever want to go back to qualifying for EIC. That's taking too many steps backwards to get an extra few bucks in April.

I only got to page 2 but I'm probably going to agree with HHSTigerfan's posts.

 

[sam_gordon]

This is wrong. Not all homeowners can deduct their interest. Only McMansion owners. I get $11,400 standard deduction same as a renter does. I pay interest on my home loan, but I'd have to pay to the tune of about $10,000 in interest to itemize, not the $1500 I do pay.

I'm sorry, I take offense at that. We by no means live in a McMansion. Our first house was not a McMansion. But you're darn right we deduct our interest. BTW, that interest is well less than the $11,400. But we have other deductions (including state taxes) that put us WELL over the standard deduction, so we itemize. And if you're only paying $1500 a year in interest, you either have a small loan or you're at the end of your loan term.

BTW, I agree with the PP who says do away with all credits and deductions. Make it a flat percentage. You can even stagger it based on income. Think about how simple taxes would be? You made $x? You pay x%. Done. The government would save so much money by all but eliminating the IRS.

However, the interest deduction encourages home buyers. Charity deduction encourages giving to charity. Business deductions encourage small business owners.

 

[BellePrincessBelle]

This is wrong. Not all homeowners can deduct their interest. Only McMansion owners. I get $11,400 standard deduction same as a renter does. I pay interest on my home loan, but I'd have to pay to the tune of about $10,000 in interest to itemize, not the $1500 I do pay.


Why does no one realize that there are 24 hours in a day. Both my wife and I work, we have 2 kids, and there is one parent home at all times with the kids. I work during the day and my wife works during the evenings. She is there for when they are off school, sick, and the summers and I am there in the evenings. You don't need daycare for both parents to work.

Only McMansions owners huh? Well you are very wrong. Everyone I know claims mortgage interest but then again we live in a high cost area where the average ranch is over 300K.

 

[flakypuff]

But she did mention that she might have to rethink the idea of working (and thus getting back on the welfare train)

So you claim its not welfare and not an incentive to not work... but then you talk about the OP trying to decide of ifs more profitable to work or stay home and collect the EIC... which is it?

I think YOU made you point Please stop. Be nice now.

 

[minushka72]

Why does no one realize that there are 24 hours in a day. Both my wife and I work, we have 2 kids, and there is one parent home at all times with the kids. I work during the day and my wife works during the evenings. She is there for when they are off school, sick, and the summers and I am there in the evenings. You don't need daycare for both parents to work.

This is what our family does. We both work full time jobs but my DH is home during the day with our 2 small children and then we have dinner before he goes to work. DD is 1 and DS is 4 so daycare would be a huge expense but we make the sacrifice of our time together so our kids get a wonderful upbringing w/ both their parents taking an equal share of raising them.

 

[princesscharming]

I might not be understanding the OP's situation correctly, or why she gets $300 -$6000 in refunds. But I just wanted to say that if her DH's withholdings are or have been resulting in such large refunds, they might want to reconsider what he's withholding. Ideally refunds should be very little. If you're getting a ton back on your refund, essentially you are giving the government your money to borrow, interest free. Rather, you should try to keep access to that money so you can earn the interest.

I understand some people like big refunds because it keeps them from spending it at first. And they can use it for some big purchase or vacation. But if you could sock it away in an account, you'd have that $3000 (or whatever), plus the interest.

 

[DawnM]

I would imagine that many in this particular program do not have two parents in the home.

For DH and me though, we both have (had) jobs that require us to work daytime hours. I am not working right now and our kids aren't preschool age, but we did need preschool when both of us were working. Now, we made enough money that it was still quite beneficial for me to work, but we are talking about the low income tax credit here, so I don't assume that this is true of everyone.

Dawn

Why does no one realize that there are 24 hours in a day. Both my wife and I work, we have 2 kids, and there is one parent home at all times with the kids. I work during the day and my wife works during the evenings. She is there for when they are off school, sick, and the summers and I am there in the evenings. You don't need daycare for both parents to work.