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

[disneychrista]

Yes EIC is a form of welfare, but as far as I know there is NO WAY to not take it, if your family is eligible. If you fail to take the credit the government will do if for you. So it is not fair to jump on the OP for recieveing it.

 

[HHSTigerFan]

So to you in makes sense for someone to continue to work when they make less than they are paying out in child care? Please explain to me why!

In this case..yes, because she isn't doing it on the back of the taxpayers..

 

[HHSTigerFan]

Yes EIC is a form of welfare, but as far as I know there is NO WAY to not take it, if your family is eligible. If you fail to take the credit the government will do if for you. So it is not fair to jump on the OP for recieveing it.

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

 

[bluesaturn]

I read the original post as - her tax return will be $3000 less than it was last year - presumably because she worked and therefore had a higher total income this year. It didn't sound like she only made $3000 total from working.

 

[Tweevil]

Yes EIC is a form of welfare, but as far as I know there is NO WAY to not take it, if your family is eligible. If you fail to take the credit the government will do if for you. So it is not fair to jump on the OP for recieveing it.

No jumping on anyone here, I think if someone works to make money, even a little bit, it stinks that the credit goes away. I guess I never knew it was a form of welfare benefit. Now I have a better understanding.

 

[MrsPete]

I am a SAHM and everytime we have considered me working - we take tax implications, childcare, gas, car wear and tear, wardrobe and eating out into account and it just doesn't make financial sense for me to work!

Keep in mind that this can vary from person to person, and it can change over time -- what's true for you right now may no longer be true for you in a few years.

For me, going to work is definitely a profitable venture. Although my paycheck isn't huge, I am "in the black" when it comes to our overall taxes. Our kids are teens, so we're in the world of braces and car insurance rather than childcare -- it seems to cost about the same amount, though with toddlers you have the option of staying home, whereas teen expenses don't have an equivalent. I live 1.5 miles from the school where I teach, so my transportation costs are small; I've considered riding a bike (for the exercise and savings), but I'd have to cross a 4-lane intersection, which wouldn't be safe). I tend to spend more on my "at home" wardrobe than I do my work wardrobe, and we don't eat out frequently.

Factor in the fact that having 19 years in the school system, I'm 2/3 of the way to my pension -- and if my health/lifespan is similar to that of my female relatives, that pension stands to be more valuable to me than my current paycheck. My husband, on the other hand, has a bigger paycheck but a so-so retirement plan. Having both our jobs balances out the overall financial picture.

 

[MrsPete]

No jumping on anyone here, I think if someone works to make money, even a little bit, it stinks that the credit goes away. I guess I never knew it was a form of welfare benefit. Now I have a better understanding.

I'll take the opposite side of that equation: It stinks that the government ever allowed "not working" to appear more . . . profitable? cost effective?

The system put the OP into a difficult position -- by working, she seems to be losing. The system never should have allowed such a situation to exist.

 

[LoveBWVVBR]

This is part of the reason why we chose for my partner to be a SAHM. By the time we paid for childcare, she'd bring home very little. Not worth it.

(And no, I don't qualify for the EIC.)

We were in the same situation. My DH and I both have well-paid careers. I left mine before we had kids, simply because we were being eaten alive in taxes. We actually ended up with MORE money the year after I left my job, and I made a pretty darned good professional salary. It's so depressing, it really is. We would have been much better off living together and just having kids than actually getting married.

As soon as we got married, we started owing these huge tax bills. The one with the big penalty for "not paying enough in" even though we were withholding EXTRA was just the icing on the cake. We had to figure something out. After federal taxes, state taxes, wear and tear on my car, gas, work clothes, etc., I was taking home very little of my very good salary If I'd had to add childcare in there, I'd probably have been paying to work. Ridiculous. The tax laws are set up so there is no incentive to have 2 salaries in some situations.

 

[LoveBWVVBR]

There have been articles written for years about how many two income families would be further ahead to become a one income family when the taxes and work expenses are added to the increased transportation, convenience foods and child care expenses are added together. In some truly perverse situations, the family pays to send the second "wage earner" to work!

While we have personally found this to be true, there is really no accounting for what this does to the stay-at-home parent's career trajectory/professional goals. Sometimes it does make sense to "pay to work" for a number of years.

If I had loved my career, I would have stuck it out and paid to work for a number of years so I wouldn't have lost traction/salary increases. My sister will be doing this when the time comes because if she leaves her career, there is really no going back. I don't regret leaving my career since I didn't love it and I can go back to a related field relatively easily. Some careers aren't like mine, though, and taking a break to SAH will derail the career entirely.

 

[LoveBWVVBR]

EIC is welfare, to collect that when there is a way to avoid it is a prime example of why this country is in the shape it is, too many people expecting freebies.

FYI - Not everyone who gets an EIC is avoiding work. My BFF is a social worker with 3 kids and she gets it. I've never met anyone who works harder and for less. I told her that she had better apply for foodstamps too because as far as I'm concerned, if anyone is owed that, she is. She provides an absolutely critical service to society and gets paid peanuts for it

 

[Acklander]

Yes EIC is a form of welfare, but as far as I know there is NO WAY to not take it, if your family is eligible. If you fail to take the credit the government will do if for you. So it is not fair to jump on the OP for recieveing it.

No, it's not welfare, it's a tax credit. In theory they are refunding on additional taxes that the taxpayer has paid beyond income taxes (i.e. sales tax, S.S. tax, excise tax and so on) The only reason why it's larger than what a taxpayer has paid in on the forms, is those additional taxes aren't listed on your W-2.
To call it welfare you'd have to call other tax credits welfare as well i.e. child care tax credits, first homeowner tax credits, solar energy tax credits and so on.

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?

 

[HHSTigerFan]

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?

Because one is an incentive to buy a house, the other is an incentive to not work.. If someone thinks it isn't fair, they can buy a house..

 

[Acklander]

Because one is an incentive to buy a house, the other is an incentive to not work.. If someone thinks it isn't fair, they can buy a house..

No, it's an EARNED income credit. The only way that you can get the credit is if someone in the family is actually working. If no one worked, and they just collected welfare, they would not qualify for it. - So, yes, it's an incentive for someone to work instead of just being home collecting welfare. What the OP is struggling with is, is it worth it for her to continue at a low income job when she's paying child care, plus extra taxes, plus gas to get a job and so on. It's a common dilemma amongst those who are deciding if they should go back to work or stay at home with the kids.

 

[VAfamily1998]

I'll take the opposite side of that equation: It stinks that the government ever allowed "not working" to appear more . . . profitable? cost effective?

The system put the OP into a difficult position -- by working, she seems to be losing. The system never should have allowed such a situation to exist.

Absolutely!
Working a paying job should never put you in a position where it is less profitable than staying at home.

 

[crashbb]

I read the original post as - her tax return will be $3000 less than it was last year - presumably because she worked and therefore had a higher total income this year. It didn't sound like she only made $3000 total from working.

I thought that as well - and then re-read the OP.

She made $6000 total from working (I assume she means pre-tax/gross). So, if she also paid $3000 more in tax, her net income was only $3000.

 

[DawnM]

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.

Dawn

Absolutely!
Working a paying job should never put you in a position where it is less profitable than staying at home.

 

[HHSTigerFan]

No, it's not welfare, it's a tax credit. In theory they are refunding on additional taxes that the taxpayer has paid beyond income taxes (i.e. sales tax, S.S. tax, excise tax and so on) The only reason why it's larger than what a taxpayer has paid in on the forms, is those additional taxes aren't listed on your W-2.
To call it welfare you'd have to call other tax credits welfare as well i.e. child care tax credits, first homeowner tax credits, solar energy tax credits and so on.

So they are getting away with no taxes whatsoever... which is welfare..

 

[HHSTigerFan]

No, it's an EARNED income credit. The only way that you can get the credit is if someone in the family is actually working. If no one worked, and they just collected welfare, they would not qualify for it. - So, yes, it's an incentive for someone to work instead of just being home collecting welfare. What the OP is struggling with is, is it worth it for her to continue at a low income job when she's paying child care, plus extra taxes, plus gas to get a job and so on. It's a common dilemma amongst those who are deciding if they should go back to work or stay at home with the kids.

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?

 

[Marionnette]

No, it's not welfare, it's a tax credit. In theory they are refunding on additional taxes that the taxpayer has paid beyond income taxes (i.e. sales tax, S.S. tax, excise tax and so on) The only reason why it's larger than what a taxpayer has paid in on the forms, is those additional taxes aren't listed on your W-2.
To call it welfare you'd have to call other tax credits welfare as well i.e. child care tax credits, first homeowner tax credits, solar energy tax credits and so on.

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.

 

[DawnM]

I am confused. Did OP say she was getting EIC? I didn't read that into the OP.

As for the $3K less back.....could it be that the spouse changed the withholdings or something else changed to where they were getting more per month and that is why the return is less, rather than because of her earned income?

BTW: Here is the EITC info:

http://www.irs.gov/individuals/article/0,,id=150513,00.html