Today I love the IRS

[luvsmickeymouse]

N.Bailey,

I right there with you on that. I do the same thing, and hear the same why do you let the government have a free loan song and dance as well. I love getting my nice return each year and wouldn't do any differently either.

Me too! I pay a few bills, save some, and go to Florida!

 

[brerrabbit]

When I hear about people who are getting no refund vs people who are getting refunds and the comments back and forth I feel like a lot of people just plain don't get "it" when it comes to taxes. In the beginning of the federal tax plan, everybody paid what they owed in April of the following year, no withholding from each check. The government figured out pretty quickly that on average most families and individuals were not great financial planners and could not come up with the money needed to pay each April. So they started deducting taxes throughout the year so the burden would not be as great come April. The fact that a person gets a refund does not mean that they are paying less taxes than a person who does not get a refund. We all pay off the same tax code. What it means is one person put more aside than the other as they went. It's no different than a family that pays there own property taxes. If last years bill was $1,200 then one family may save $100 a month to pay the bill. Another family said yeah last year was $1,200 but they always increase property taxes so I am going save $150 a month in case it goes up. At the end of the year the taxes on the two homes are identical and the are $1,500. One family has to pay an additional $300 and the other family has $300 more than they need. So one family has to pay and one family gets a "refund". They both paid the exact same amount in taxes. The only differance is that each family made a personal decision about how to save. The same goes on with Federal taxes as each family makes a personal decision on how much to withold.

I'm sorry if I made ot sound simple and everybody that reads this says, "yeah, I already knew that!" But after reading the carping about how unfair it is that some get refunds and some don't I really don't think a lot of people really understand the system.

I posted on another thread and will say it again here, people should run a proforma tax return several times a year to see where they stand in terms of taxes. I do one four times a year and adjust my witholding up and down as needed. Some years if things are okay and we have had no financial emergencies, (car repairs, a/c repairs, etc.) I may overwithold to get the refund. Other years I may try to come in as close to zero as possible when we need additional money to take care of family needs.

In the end remember that you control your own destiny. You and you alone (or with your spouse) choose whether you will get a refund or have to pay, not the government. Also as far as what to put on your W-9 (married with 0, single with 0, etc.) those are guidelines, not absolutes and every families return will vary based on their circumstances so in the end it's all up to you, not the government.

 

[Christine]

brer rabbit--I knew that!!

I think it is a little more complicated than that though. It's not really all about people who pay in more during the year and then people who don't pay enough.

I stated on another thread that I have maxed out my 401K, maxed out my flexible spending accounts, and paid an extra $115 per pay period to the Federal Government. All while claiming "Married with 0 dependents." Believe me, I have paid a LOT of my paycheck towards taxes. Yet, I still owed money.

I think the "carping" is that there are some people who don't do all these things, may even claim Married with 4 dependents, and still get a huge refund.

The tax system is just unfair to people in certain income brackets--mostly the mid-middle class.

 

[brerrabbit]

I don't know the specifics of your tax return but, some people have big mortgages, multiple children (which equals tax credits), pay a lot in property taxes, give a lot to charity, etc. Again if you run your taxes several times a year you can make the adjustments to make sure you pay enough. The tax laws are the same for everyone so there is a logical reason for the differances between your situation and someone elses. Unless of course they are cheating on their taxes then that throughs the whole arguement out the window.

 

[robsmom]

When I hear about people who are getting no refund vs people who are getting refunds and the comments back and forth I feel like a lot of people just plain don't get "it" when it comes to taxes.

You posted exactly what I wanted to say. If people choice to overpay during the year so that they get a big refund that is their choice. I made a little mistake and underwithheld in 2004. Went from a $3000 refund in 2003 to oweing $4000 in 2004 back to a refund (i think) for this year. Getting a refund didn't mean I paid less taxes total or came up with new deductions or ways to get money back. I paid alot of taxes each year!! In fact my total taxes actually paid for the 2 years where only about $1000 different.

To the poster who paid over $20,000 total and asked what she was doing wrong. The answer is that you are doing something right. You are making a lot of money. that is not a bad thing!! There are always ways that someone could reduce further - like getting a big mortgage. But carrying a mortgage that you don't want or need and spending another $10000 on interest to save $3000 in taxes isn't always a "good" thing either.

Without knowing what someone is paying in total, you can't judge based on a refund. That said, EIC is oftern more than a refund. A refund is getting back what you overpaid. When EIC gives more than someone paid it is a government subsidy. We can take the word welfare out if people don't like that word but no matter how you slice it EIC is a form of income redistribution. I have no issues with having federal welfare (subsidy) programs to help those that need it - I think that is a great thing about our country. When the individuals receiving "aid" have enough income (via the aid or other sources) to buy things that are out of reach for many American's (nice tv/ vacations), etc. than i think the government subsidy is too high.

 

[Christine]

To the poster who paid over $20,000 total and asked what she was doing wrong. The answer is that you are doing something right. You are making a lot of money. that is not a bad thing!! There are always ways that someone could reduce further - like getting a big mortgage. But carrying a mortgage that you don't want or need and spending another $10000 on interest to save $3000 in taxes isn't always a "good" thing either.

That would be me. My *issue* with the tax system is that it doesn't take into cost of living. Yeah, on paper, I look like I make a hell of a lot of money. Probably to someone in a less urban area, they would envy my salary. But it doesn't mean a thing when every bit of it goes out to live. So, the IRS treats me like "Martha Got Rocks" because on paper it looks like I am. But the tax bill is really more than I can handle comfortably.

You know, the government pays its own employees more based on where they live, you'd think they might take it into account on your tax return.

 

[BuckNaked]

I'm sorry if I made ot sound simple and everybody that reads this says, "yeah, I already knew that!" But after reading the carping about how unfair it is that some get refunds and some don't I really don't think a lot of people really understand the system.

I haven't seen anyone carping about refunds. We prefer not to have big refunds because we can better use the money during the year. Having it in our paycheck every month means we can put more towards the 401K and the kids' college funds and still not be living paycheck to paycheck.

My complaint is totally unrelated to what you posted about, in that I think the EIC is wrong. Putting in too much and getting some back is one thing. Putting some in and getting that back plus more is what I have an issue with.

 

[Free4Life11]

Why doesn't it bother people that many folks are doing just fine but receive this benefit?

It doesn't bother me because I already have enough things in life to worry about. The government is always going to spend money on some things I don't like. There's not much I can do about it. I'd rather just count my blessings and move on.

As long as I get a refund at tax time I'm a happy camper. Hopefully I'll get my W2's soon and can get my $550 or so refund!

 

[Wonderlandmom]

My complaint is totally unrelated to what you posted about, in that I think the EIC is wrong. Putting in too much and getting some back is one thing. Putting some in and getting that back plus more is what I have an issue with.

ITA! I never was aware of EIC before this thread. Very enlightening (and my DH was in a combat zone part of last year but we are not even close to getting such a gift).

ETA: I don't blame people for taking it if they qualify. It would be silly not to. But just not sure why it is there to begin with.

 

[robsmom]

That would be me. My *issue* with the tax system is that it doesn't take into cost of living. Yeah, on paper, I look like I make a hell of a lot of money. Probably to someone in a less urban area, they would envy my salary. But it doesn't mean a thing when every bit of it goes out to live. So, the IRS treats me like "Martha Got Rocks" because on paper it looks like I am. But the tax bill is really more than I can handle comfortably.

You know, the government pays its own employees more based on where they live, you'd think they might take it into account on your tax return.

This is an excellent point and idea. Someone earlier mentioned that there may be two people with the same income but because of where they live one really need the EIC more. Your point is that on the higher end of the scale the same issue exists. Maybe if cost of living could be factored in, the entire system could be "fairer". Like everyone else, i would be happy if I paid less taxes, but I honestly would not describe my bill as "more than i can handle". This could be because i don't live in a high cost of living area.

 

[N.Bailey]

That would be me. My *issue* with the tax system is that it doesn't take into cost of living. Yeah, on paper, I look like I make a hell of a lot of money. Probably to someone in a less urban area, they would envy my salary. But it doesn't mean a thing when every bit of it goes out to live. So, the IRS treats me like "Martha Got Rocks" because on paper it looks like I am. But the tax bill is really more than I can handle comfortably.

You know, the government pays its own employees more based on where they live, you'd think they might take it into account on your tax return.

I read robsmom's reply and agree with her completely. I'm sorry There really is nothing fair about the way the system is set up. A flat tax would be much more fair, IMO.

I remember watching some politician on TV some time ago and he wanted to purpose doing away with the tax system completely and ONLY taxing you when the money is spent. As long as you saved it, you'd never pay any tax, but once you started spending it, it would be a pretty heavy tax. I didn't really like his idea because I come from a small town where everyone leaves the town to spend their money. I just didn't see how our town would raise any tax money at all. Then states like Florida (where lots of people vacation) would get an enormous amount.

I can't say I liked his idea, but at least he was thinking of alternatives. IMO, changes need to be made and while I don't have all the answers, I wish someone would come up with something.

 

[froglady]

I read robsmom's reply and agree with her completely. I'm sorry There really is nothing fair about the way the system is set up. A flat tax would be much more fair, IMO.

I remember watching some politician on TV some time ago and he wanted to purpose doing away with the tax system completely and ONLY taxing you when the money is spent. As long as you saved it, you'd never pay any tax, but once you started spending it, it would be a pretty heavy tax. I didn't really like his idea because I come from a small town where everyone leaves the town to spend their money. I just didn't see how our town would raise any tax money at all. Then states like Florida (where lots of people vacation) would get an enormous amount.

I can't say I liked his idea, but at least he was thinking of alternatives. IMO, changes need to be made and while I don't have all the answers, I wish someone would come up with something.

If he was talking about the Fair Tax, it would only replace Federal taxes, not state and local.

 

[froglady]

The effort to make taxes "fair" to everyone in any given situation is what got us into the mess in the first place. Flat rate? Someone will complain that "I make the same as X, but he doesn't have any children while I have 3. It's not fair!" or "I make the same as X, but my cost of living is twice as much as his. It's not fair!"

Any tweaking just results in someone else being treated unfairly, so it has to be rewritten/amended again, and again, and again, until the tax code is as big as a NY phone book.

 

[LisaNJ25]

Yeah, $4000 for the entire year should have been quite noticeable. I don't think it's rocket science. I'm glad I don't owe what they'll probably end up owing because that one's gonna hurt!

It was actually only $400 and do you believe he told the payroll girl that if he ends up owing he wants the company to pay.

 

[N.Bailey]

It was actually only $400 and do you believe he told the payroll girl that if he ends up owing he wants the company to pay.

YIKES!

How in the world could he not notice this? He must have direct deposit and when he's not working, he must be hibernating under a rock!

 

[LisaNJ25]

YIKES!

How in the world could he not notice this? He must have direct deposit and when he's not working, he must be hibernating under a rock!

LOL... sad thing is I dont think he will end up owing. . he qualifies for the EIC... and someone is filling with he GF and putting her son and his daughter... so this year they will not get their usually 4-5 thousand back but will still get something.

 

[tinatark]

I have to say, EITC is a gift to those who receive it... typically used up very quickly. It's meant to supplement the income they don't make during the year - but buying cars, rims, vacations, etc. WITH THE EITC defeats the purpose. I know moms who plan to use the windfall on... a plastic surgeon. I have to say, it has a place, most definitely, but is abused - ie. live with your parents/boyfriend, etc, work a little, file as head of household (which you aren't, if you aren't!) then get a windfall off taxpayers backs.

 

[LisaNJ25]

YIKES!

How in the world could he not notice this? He must have direct deposit and when he's not working, he must be hibernating under a rock!

LOL... sad thing is I dont think he will end up owing. . he qualifies for the EIC... and some how is filling joint with his GF and putting her son and his daughter... so this year they will not get their usually 4-5 thousand back but will still get something.

 

[MagicKingdom05]

The wait is now all over. I just got back from getting my taxes done at H&R Block and they were great. I'm getting a Federal refund of $3664 and an Illinois refund of $183 for a total of $3847 Apparently in the state of Illinois if you pay property taxes you get a 5% property tax credit which ended up getting me an extra $126. I didn't even realize there was such a credit for this. I thought I was only going to get $57 back from the state so this was a complete surprise.

 

[MOMOFMNM]

we pay too