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

[OHJulie]

Another wonderful story of how important it is to transfer wealth from the "privileged" to the less fortunate.

My sister just called and told me about a woman that she works with. She is a single mom, part-time server at a restaurant and has two children. She will be using her $6500 tax refund to pay for a "chest enhancement."

My husband I both work full time and we are trying to figure out how to help our son with college costs when he starts in the Fall. We will get no help from the government, because we "make too much money", but the amazing tax code instead allows for this kind of abuse.

 

[traviesojmt]

There are SO many ways people cheat the Gov't out of money (eg. unemployment when they could very well get a job at Mcdonalds until something better comes around) At least these people are WORKING!
@traviesojmt-Not trying to debate with a fellow military wife,but just out of curiousity how are you pulling off 6 figures?! My hubby is a prior enlisted Officer and I'm also a SAHM and we make nowhere near that, even with deployment?!? Are we doing something wrong or what..lol

We had a bonus thrown in there this year. We are also a prior enlisted/SAHM family. I only brought it up because any program that would give us extra money has to be broken. I also counted everything, including BAH. Honestly though, wouldn't you be annoyed to know that your hard-earned money was going to subsidize someone making 6 figures? I was using us as an example of where EIC doesn't work.

 

[gibsontrio]

We had a bonus thrown in there this year. We are also a prior enlisted/SAHM family. I only brought it up because any program that would give us extra money has to be broken. I also counted everything, including BAH. Honestly though, wouldn't you be annoyed to know that your hard-earned money was going to subsidize someone making 6 figures? I was using us as an example of where EIC doesn't work.

boo we never got a bonus
Yes and no. EIC is the last way I see people cheating the system, but you have a point. I have a distant relative who's been on unemployment WAY to long along with food stamps and Wic, they live better than we do and THAT isnt fair

 

[traviesojmt]

boo we never got a bonus
Yes and no. EIC is the last way I see people cheating the system, but you have a point. I have a distant relative who's been on unemployment WAY to long along with food stamps and Wic, they live better than we do and THAT isnt fair

I will say that the bonus is great when we get it, but it also means that my DH's career field is undermanned. That means more deployments so there are always trade-offs.

I completely see where you are coming from with your argument. The government definitely does not do anything efficiently.

 

[bumbershoot]

Yeah, you're right. Members of our Armed Forces are slackers.

Or people trying to start their own business once out of grad school, with no loans to start it up because the loan officer at the bank asked "are you getting married any time soon? no? well who is going to pay this loan when you default?" (not fun)

I don't understand folks who rent and begrudge the fact that they don't receive a tax credit unlike the property owner. As others have mentioned you still have the option of the standard deduction. Additionally, the property owner generally has to pay property taxes and as we know can be quite high in some areas.

Renters have risk too. More in a second....

BTW, why should renters be entitled to take a deduction? It is not their investment. I rent. It never occured to me that I should be entitled to some sort of deduction. The risk is the homeowner's not mine.

Because we are paying it.

If the landlord is sane, they are charging for their base mortgage cost, the interest, and their property taxes in the full year's worth of rent. If they aren't, I don't know why they are in the business they are in; doesn't seem smart to me.

Since it's the renter generating that money, it's just annoying that it's the owner that can benefit.




Well, I'm someone who used to get EIC (not much, as I was single with no kids), but then I got a "real" job and didn't get it anymore, and now we pay taxes in, and I am not bothered by those who get EIC, because I know how helpful it was.

Saturday Night Live had a skit a couple weeks ago and some posters are reminding me of it...a certain group of society is in tears over Hallmark commercials, soldiers coming home and making Folgers, etc etc (all these little images that are poignant), but then the person mentioned, basically, all the people in the country that are poor, and the person didn't care. I feel that the help given to those who truly absolutely NEED it far outweighs the annoyance of the cheaters. I find it sad that others don't see it that way.

Then again, I grew up VERY poor, so maybe that gives me another viewpoint...

 

[SunnyP4Disney]

There are SO many ways people cheat the Gov't out of money (eg. unemployment when they could very well get a job at Mcdonalds until something better comes around) At least these people are WORKING!
@traviesojmt-Not trying to debate with a fellow military wife,but just out of curiousity how are you pulling off 6 figures?! My hubby is a prior enlisted Officer and I'm also a SAHM and we make nowhere near that, even with deployment?!? Are we doing something wrong or what..lol

My Dh is an E-7 with over 18 years in. We lived in a high cost area of South Fl for five years. Between BAH, COLA, sea pay, clothing allowance, separation allowance, etc., hubby was around 85-90 thousand easy. That's before my salary was factored in.

FYI, we have never qualified for EIC. Back when we were first married, BAH was factored into the qualification. I've always worked and we only have one child and sold our house so we don't get the interest deduction anymore. Well be lucky if we don't have to pay in.

 

[diziz]

I have been following this thread all day and have found it very interesting. The most interesting part about it is that now I understand why our tax system is as broken as it is and why the people elected to office do nothing to try to fix it -- its because there really is about 50% of the population that really and truly believe that government hand outs (across the board) are a good idea. And because of that - the system will never change. Until there are more people working and paying taxes then those who are freeloading - the system will never change.

I incurred significant debt to put myself through lawschool -- I make okay money (less than 6 figures though) as a result of this expensive education. My DH incurred significant debt to put himself through a masters program and makes okay money in his field (less than 6 figures). Combined we make about 150K.

As a result -- we do not get to deduct our student loan interest because "we make too much" and we don't get to deduct our daycare expenses for our child because "we make too much" -- so the two things that allow us to go to work everyday so we can make all this supposed money - we don't get to deduct. In the end - we actually NET less than those without student loans and without daycare costs.

On 150K last year -- we paid in over 40K in taxes! That is outrageous.

In comparison - my daycare provider who runs the daycare out of her house told me that her husband - who makes 100,000 and her who makes 50,000 (same total amount of income we make) had to pay ZERO in taxes because she gets to deduct their mortgage, the food she buys for the daycare, the cost of trashbags, all activities and games she buys for her own kids (because the daycare uses them too), her heat, her electricity...etc...and as a result - they keep 100% of their income.

WOW - just WOW -- so my daycare provider - who watches her own 2 kids plus 3 other kids and her husband who works construction make 150K a year and have NO student loan debt and NO daycare debt....and my DH and I - after our student loan debt (10K), daycare bills (10K) and paying our taxes (40K) make 90K a year....

Just doesn't seem fair - or right!

The system is broken. It needs to be fixed.

If we are going to tax those who make "good money" then their needs to be an acknowledgment of the costs that go into that "good money" (daycare, student loans, commuting costs, work clothing costs...)

I wish with my entire heart I could be a SAHM -- but with the student loan debt - its just not feasible for us. And we are in the awful limbo where we make too much together so we get slammed on taxes - but not enough separately for one of us not to work.

MY SIL makes 35K a year -- she is trying to have baby #2 - when that happens - she will quit because they will make more money by her staying home. Just not fair...

the EIC though is about as stupid of a tax credit as you can get...you should never ever ever - under any circumstances - take out more than you put in -- my god - even children get that concept.

And I don't buy the whole reimbursement for gas tax etc argument...

everyone should have to pay something into the tax system -- if all you can afford is $10 then fine - that is your contribution -- but everyone - no matter what their income - should have to contribute something -- no one should get away with paying nothing and certainly no one should get money from the gov't come tax time when they did not pay it in.

Fixing that would be a start....

I won't hold my breath though...it will never happen.

-Diziz

 

[LoveBWVVBR]

OMG this was us! After being floored that we paid in 23k in federal taxes between us and stupidly expecting a huge refund based on what we received back while single....we factored in a stock option that I cashed out mid year that bumped us into 6 figures...there were hysterical tears when we realized we had to pay in another 5k....so after $2400 in taxes taken out at the time of the transaction and the increase in tax owed at tax time...that 5k bonus cost us $7400.

There was zero childcare available in our area when we had our son(a year after 9/11)..unless I wanted to travel 45 minutes beyond my 30 minute commute to work and having to cut my hours to part time to accommodate extremely limited daycare hours at 12k per year..so I stayed home..we were better off giving up my 40k+ per year salary. DH was making more and I worked from home a little bit making 15k...so making 105k we paid in 28k..netting 77k...making 85k with a child we paid 4k..netting 81k...add in savings on gas, on wear and tear, office attire, $5 every other day for cakes, cards and gifts, take out, gifts for bad days at work ...

..the only draw back is that after 8.5 years as a SAHM my social security credits have gone down and I am having a heck of time finding a job now that the kids are in school.

The year when we paid a big penalty for "underwithholding" even though we were withholding extra, we thought that we were getting a refund also We owed something over $20K with the penalty, but I can't remember the exact amount now. It was pretty stressful. We were nowhere near rich. We lived in a very high COL area, and our salaries were good on paper but not very good after the huge tax bite. We did so much better after I started to stay home. I don't worry about the social security credits. I assume that there will be no social security when I retire anyways and just plan accordingly. Anything we get from social security will be a bonus I guess.

 

[summerrluvv]

Income limits to qualify for the EIC

$43,352 ($48,362 married filing jointly) with three or more qualifying children
$40,363 ($45,373 married filing jointly) with two qualifying children
$35,535 ($40,545 married filing jointly) with one qualifying child
$13,460 ($18,470 married filing jointly) with no qualifying children

I hardly consider a family making $48,362 to be NON PRODUCTIVE members of society. What an asinine statement.

 

[marlynnp]

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.

So, you don't pay state or local income tax?
You don't have Real Estate taxes either?
And you don't make any charitable contributions?

Where do you live?
I may need to consider moving.

 

[HHSTigerFan]

Income limits to qualify for the EIC

$43,352 ($48,362 married filing jointly) with three or more qualifying children
$40,363 ($45,373 married filing jointly) with two qualifying children
$35,535 ($40,545 married filing jointly) with one qualifying child
$13,460 ($18,470 married filing jointly) with no qualifying children

I hardly consider a family making $48,362 to be NON PRODUCTIVE members of society. What an asinine statement.

Then why are we to the point that those people take more from the system than they give to it? Isn't that the definition of whether a person is productive?

If I own a business and a guy is costing me $100K and he is bringing $90K into the company, is he a productive employee or a nonproductive employee? I say he is non productive, regardless of how much he earns..

 

[roadtripper]

I love how these threads always end up bashing the working poor for how much they "milk" the system. That's exactly what corporations and the super rich want us to do--turn on the working poor, union workers, people with public pensions, and (insert favorite whipping boy here) so we'll forget how much they did to destroy our economy a few years ago, and how much wealth they have successfully protected while the rest of us watched our retirement and pension plans go into freefall. But they definitely deserved those taxpayer-funded seven figure bonuses for driving the economy into the ground. We turn on each other, begrudge working people getting a few thousand so they can put food on the table, and they are right back in business. The wealthiest 10% of Americans control 70% of all the wealth in the country, and we're worried about someone's 50 inch plasma screen TV.

 

[BubMunkeyBles]

I will say that the bonus is great when we get it, but it also means that my DH's career field is undermanned. That means more deployments so there are always trade-offs.

I completely see where you are coming from with your argument. The government definitely does not do anything efficiently.

Lots of people's DH's career field is undermanned and don't get bonuses. Think of all the officers and middle/upper enlisted guys. The Air Force is hardly paying bonuses anymore, they don't have to because people need jobs (along with the rediculous amount of downsizing). My DH may not be deployed but he does work 12-16 hours a day.

Anyways. We wouldn't qualify for EIC credit if all our incomes counted (BAS, BAH, sep pay etc etc). But we do, and I'll take the money because we qualify. It's automatic. I think its silly to blame people who take it when its automatic when they file taxes. I will say if we didn't qualify for EIC it definitely wouldn't hurt us. We never rely on tax money for anything.

 

[HHSTigerFan]

And some people want to blame the wealthy for everything..

They have no problem with a person paying zero income tax (or in case of EIC, a negative amount), but God help us if a guy making $500K pays $150K instead of $160K..

Why is this country so obsessed with helping the bottom rather than encouraging people to strive for the top?

 

[Anjelica]

And some people want to blame the wealthy for everything..

They have no problem with a person paying zero income tax (or in case of EIC, a negative amount), but God help us if a guy making $500K pays $150K instead of $160K..

Why is this country so obsessed with helping the bottom rather than encouraging people to strive for the top?

People forget that if it weren't for the wealthy than folks would be burdened with more of the taxes that are paid. Here are some hard facts - the top 1 percent of income earners paid 40% of all federal income taxes in 2007, while the bottom 50% paid only 3%. More than 1/3 of U.S. earners paid no federal income tax at all. So basically 33% of all people who worked in 2007 paid ZERO federal income tax.

Again, redistribution of wealth is a horrible way to go and does nothing to provide incentive for those to work harder.

http://www.heritage.org/budgetchartbook/top10-percent-income-earners

 

[crisi]

I have seen studies that say a flat tax would need to be around 14% to equal whats currently paid thru the current system... Some people don't like it because its not "fair" to the low income, they prefer the current system where they get paid to love here..

Just for reference, I'm in the 36% marginal tax bracket and my husband and I are pretty well paid. My effective federal tax rate is only 17%.

Make sure you are comparing your effective tax rate, not your marginal rate, before you decide that flat tax is a good deal. For most Americans, their effective tax rate is LOWER than 14%.

 

[indimom]

I have been following this thread all day and have found it very interesting. The most interesting part about it is that now I understand why our tax system is as broken as it is and why the people elected to office do nothing to try to fix it -- its because there really is about 50% of the population that really and truly believe that government hand outs (across the board) are a good idea. And because of that - the system will never change. Until there are more people working and paying taxes then those who are freeloading - the system will never change.

I incurred significant debt to put myself through lawschool -- I make okay money (less than 6 figures though) as a result of this expensive education. My DH incurred significant debt to put himself through a masters program and makes okay money in his field (less than 6 figures). Combined we make about 150K.

As a result -- we do not get to deduct our student loan interest because "we make too much" and we don't get to deduct our daycare expenses for our child because "we make too much" -- so the two things that allow us to go to work everyday so we can make all this supposed money - we don't get to deduct. In the end - we actually NET less than those without student loans and without daycare costs.

On 150K last year -- we paid in over 40K in taxes! That is outrageous.

In comparison - my daycare provider who runs the daycare out of her house told me that her husband - who makes 100,000 and her who makes 50,000 (same total amount of income we make) had to pay ZERO in taxes because she gets to deduct their mortgage, the food she buys for the daycare, the cost of trashbags, all activities and games she buys for her own kids (because the daycare uses them too), her heat, her electricity...etc...and as a result - they keep 100% of their income.
-Diziz

Um, sounds like tax fraud to me. I run a licensed home day care and pay my taxes. I only get to write off a percentage of my utilities, mortgage interest, etc. as a business expense (the percentage is based on how much square footage of the home you are using and how many hours per week). Unless she is babysitting 24 hours a day and using every square inch of her home, she should not be able to write off 100% of these costs. She's either full of it or should be turned in for fraud.

Oh, and I'm getting ripped off. I watch four times as many children and don't make that before I take my expenses and taxes out.

 

[MomRN]

For crying outloud I am so sorry I mentioned the 50" plasma t.v. For the third time, I was making a judgement call on those paying for it. However, I do personally know of several people that use their EIC to pay for high end electronics and other non-necessities. I grew up poor... I've been poor... this is the first year I have made more than $25,000 in my life. I also know that these same people (not all inclusive) will be the same ones needing money for diapers and other necessities in just a few months.

Maybe it's where I live. You know tax return time. You don't dare venture to Walmart, Best Buy or HH Gregg. Forget eating out. And so it's not misconstrued, I don't believe that working poor don't deserve nice things and to eat out. I'm just saying that there is something wrong with the system in place. Once again, I don't have the solution, but something is wrong with the picture of someone getting breat implants and the beginning of the year and struggling to pay rent at the end of the year.

Had I not received help in the form of EIC, food stamps, WIC (which is a great program and too bad other need based programs aren't centered around their methods), free daycare, grants, and numerous other "assistance" programs I would have possibly not made it through nursing school. I'm not downing anyone who needs it and takes it, I've been there, but there are issues with the system.

(and to address the OP, I wouldn't work if it cost more to work than to stay home)

 

[crisi]

Um, sounds like tax fraud to me. I run a licensed home day care and pay my taxes. I only get to write off a percentage of my utilities, mortgage interest, etc. as a business expense (the percentage is based on how much square footage of the home you are using and how many hours per week). Unless she is babysitting 24 hours a day and using every square inch of her home, she should not be able to write off 100% of these costs. She's either full of it or should be turned in for fraud. I watch 10-12 children 60 hours a week and don't come close to that figure even before I take my expenses out.

Oh, and I'm getting ripped off. I watch four times as many children and don't make that before I take my expenses and taxes out.

Yep, if she writes off more than she brings in year after year, she isn't running a business and is going to get into trouble. Also, remember when you write off your house, you then have to deal with those deductions as capital gains when you sell your house - there is depreciation reclamation in the tax code.

 

[luvsJack]

Does it ever occur to some of you that that extra money by way of EIC can pay a single mom's light bill for 6 months or fix her car that broke down last month or buy diapers and wipes for a year or help her put gas in her car and help her keep up the maintenence on it while she goes to school?

Sure there are those that buy a huge TV, just like there are those that will take one whole paycheck to do the same. But there are many, many more that get this check because they NEED it. They need that extra money to pay for things that some of you think nothing of.

How about stopping for one minute and thanking your lucky stars that you do not qualify for EIC? Many people that qualify are working their tails off every day trying to make ends meet. Believe me folks, being under the qualifying income amount and living on it is no easy task. The hardship is NOT worth that flippin' check you people seem to think is oh so wonderful to receive.

Its not always as easy as "working harder".