Tax Refund

[jlmatthew]

Whats it like to get a tax refund?

I suppose I shouldnt complain, I have my deductions just about right, I only owe $7 this year

Just sucks to see all these people that put nothing in the pot get these huge refunds.

I propose that if you dont pay taxes, you dont get to vote! Thats my idea of a fair tax code!

 

[Goldtip]

I'm the wrong person to ask, the wife and I are DINKs, so tax time is always a major issue for me.

 

[WV Hunter]

Thanks to my 3 little deductions and the losses I take on a couple of rental properties I get enough back from the feds to cover what I owe the state of WV and a little left over to pay my property tax

 

[JCS]

+1 on the DINKs. We fall into that catagory.

 

[Khunter]

All the people I know that get refunds get them becasue they paid too much. Not because they are getting a free ride. I am always happy to pay a big bill at tax time instead of a refund since it means I did not overpay or pay earlier than necessary.

I always wonder why many people treat a big refund as a windfall. It is anything but. If I ever get a big refund I will be dissapointed I paid in so much more than I had to--and try to adjust things to avoid it.

Curious, could you give an example of someone not paying in but getting a 'huge' refund? Have not heard of that.

 

[Dana]

I'm with KHunter on this one. Refunds are not good.....

 

[smarandr]

I had a client today that got back over three times what they paid in during the year because of refundable credits. I'd figure there's a lot of people in the same boat as them in this country and if you multiply that out you start hitting billions of dollars real quick. Just another reason why the country is so far in the hole.

 

[A-con]

Curious, could you give an example of someone not paying in but getting a 'huge' refund? Have not heard of that.

Have you ever heard of the “earned income tax credit” ?
People with yearly incomes so low that they don’t pay any federal taxes, still file, and get a check from the IRS.
In some cases, a huge check.
It’s basically a welfare program administered by the IRS. The money comes directly out of income taxes paid by the rest of us.
I know of one person, a part time waitress with three kids who gets over $3,000 each year in a "tax refund" from the IRS, even though she doesn't pay any Federal taxes.

 

[Big Fin]

Curious, could you give an example of someone not paying in but getting a 'huge' refund? Have not heard of that.

Person has three kids. Works part-time, gets by on that and some public assistance. Has three dependents on the tax return. Gross wage is $18,000. Federal and state withholding is $0, as the tax liability is $0.

Refund, with earned income credit ($5,344) and refundable child tax credit ($3,000) will be $8,544.

No tax paid, but a $8,544 tax refund. Maybe that is not huge, but it is a common example.

I would not trade places with them, even for their refund.

This example is why no one wants to get rid of the complicated tax code we deal with. In 1996, the Federal welfare system was overhauled by adding a lot of additional credits to the tax code that previously were part of the Federal welfare system.

Whether good, or not, the example happens very often, and is the reason many people do not want to see simplification of the tax code. Eliminating all credits and deductions, and going to something closer to a flat tax would be great for this country, but with so many people in the scenario explained above, it ain't happening in my lifetime.

 

[A-con]

Big Fin, do you have any idea how many people get these “earned income tax credits” ?

In my opinion, that is huge money, considering it's "free" for them, but paid for by you, me and everyone else who does pay taxes.

 

[fowladdict]

and going to something closer to a flat tax would be great for this country.

AMEN!!

I'm all for assistance to those that really need it. Pretty much just those who physically can't work. A friend of mine is a is a manager at a grocery store and one of his employees made less than 20 grand that year and recieved about almost 6 grand from the feds. The first thing he bought were three new Game Boys for his three kids. That kind of made me sick to my stomach.

 

[wgiles]

I don't set out to get a refund, but want to make certain that I have paid enough money to cover my taxes. If I get a big refund, so be it.

 

[jlmatthew]

Earned Income Credit (EIC) is exactly what I'm talking about!

I dont mind it zeroing out your tax liability, but to get paid for it

My Ex-wife is a prime example. Refuses to get a real job, cause its not what she wants to do, but every year she gets a huge refund check for her kid (not mine).

Think about how many folks fall into this catagory, probably in the millions

 

[elk_hunter]

Now you're going to get me going. Yes, we should have a flat tax. Yes, we should simplify the retarded tax stuff. Even if that means Fin is out of a job because everyone can do their own taxes. That just means he can focus on hunting and the show.

I'm also for the little to no refund and even into the owing the govt a bit.

 

[poormanslam]

Another DINK here. I wait until the end to file to delay the pain as long as possible.

 

[Khunter]

I see the error of my thinking. Guess I thought the definition of what constitutes a 'refund' was simpler than the definition of 'sex' according to an ex POTUS.

My mistake

This is my first tax return as a business owner so I have a lot to learn, such as Hostess Donettes in the home office not being deductible as a fuel expense.

 

[Big Fin]

Big Fin, do you have any idea how many people get these “earned income tax credits” ?

In my opinion, that is huge money, considering it's "free" for them, but paid for by you, me and everyone else who does pay taxes.

Here is a quick search. I have heard it varies between 40-50% of households, depending on the economy. This article seems to support that.

WASHINGTON (AP) -- Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it's simply somebody else's problem.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization.

Most people still are required to file returns by the April 15 deadline. The penalty for skipping it is limited to the amount of taxes owed, but it's still almost always better to file: That's the only way to get a refund of all the income taxes withheld by employers.

In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax.

Tax cuts enacted in the past decade have been generous to wealthy taxpayers, too, making them a target for President Barack Obama and Democrats in Congress. Less noticed were tax cuts for low- and middle-income families, which were expanded when Obama signed the massive economic recovery package last year.

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners -- households making an average of $366,400 in 2006 -- paid about 73 percent of the income taxes collected by the federal government.

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

"We have 50 percent of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

The vast majority of people who escape federal income taxes still pay other taxes, including federal payroll taxes that fund Social Security and Medicare, and excise taxes on gasoline, aviation, alcohol and cigarettes. Many also pay state or local taxes on sales, income and property.

That helps explain the country's aversion to taxes, said Clint Stretch, a tax policy expert Deloitte Tax. He said many people simply look at the difference between their gross pay and their take-home pay and blame the government for the disparity.

"It's not uncommon for people to think that their Social Security taxes, their 401(k) contributions, their share of employer health premiums, all of that stuff in their mind gets lumped into income taxes," Stretch said.

The federal income tax is the government's largest source of revenue, raising more than $900 billion -- or a little less than half of all government receipts -- in the budget year that ended last Sept. 30. But with deductions and credits, especially for families with children, there have long been people who don't pay it, mainly lower-income families.

The number of households that don't pay federal income taxes increased substantially in 2008, when the poor economy reduced incomes and Congress cut taxes in an attempt to help recovery.

In 2007, about 38 percent of households paid no federal income tax, a figure that jumped to 49 percent in 2008, according to estimates by the Tax Policy Center.

In 2008, President George W. Bush signed a law providing most families with rebate checks of $300 to $1,200. Last year, Obama signed the economic recovery law that expanded some tax credits and created others. Most targeted low- and middle-income families.

Obama's Making Work Pay credit provides as much as $800 to couples and $400 to individuals. The expanded child tax credit provides $1,000 for each child under 17. The Earned Income Tax Credit provides up to $5,657 to low-income families with at least three children.

There are also tax credits for college expenses, buying a new home and upgrading an existing home with energy-efficient doors, windows, furnaces and other appliances. Many of the credits are refundable, meaning if the credits exceed the amount of income taxes owed, the taxpayer gets a payment from the government for the difference.

"All these things are ways the government says, if you do this, we'll reduce your tax bill by some amount," said Roberton Williams, a senior fellow at the Tax Policy Center.

The government could provide the same benefits through spending programs, with the same effect on the federal budget, Williams said. But it sounds better for politicians to say they cut taxes rather than they started a new spending program, he added.

Obama has pushed tax cuts for low- and middle-income families and tax increases for the wealthy, arguing that wealthier taxpayers fared well in the past decade, so it's time to pay up. The nation's wealthiest taxpayers did get big tax breaks under Bush, with the top marginal tax rate reduced from 39.6 percent to 35 percent, and the second-highest rate reduced from 36 percent to 33 percent.

But income tax rates were lowered at every income level. The changes made it relatively easy for families of four making $50,000 to eliminate their income tax liability.

Here's how they did it, according to Deloitte Tax:

The family was entitled to a standard deduction of $11,400 and four personal exemptions of $3,650 apiece, leaving a taxable income of $24,000. The federal income tax on $24,000 is $2,769.

With two children younger than 17, the family qualified for two $1,000 child tax credits. Its Making Work Pay credit was $800 because the parents were married filing jointly.

The $2,800 in credits exceeds the $2,769 in taxes, so the family makes a $31 profit from the federal income tax. That ought to take the sting out of April 15.

 

[Ben Lamb]

Taxes at their lowest since 1950

 

[Nemont]

Taxes at their lowest since 1950

From the article

The poor economy is largely to blame, with corporate profits down and unemployment up. But so is a tax code that grows each year with new deductions, credits and exemptions. The result is that families making as much as $50,000 can avoid paying federal income taxes, if they have at least two dependent children. Low-income families can actually make a profit from the income tax, and the wealthy can significantly cut their payments

As someone outside of that cut off I can tell you that my taxes are not going down and in fact have increased. Not griping just saying that tax receipts to the government may be down but that is not because of just tax breaks.

I have always been told that if you have to pay taxes then there are alot of people who would like to trade places with you. It seems to me that when almost 50% of people don't have skin in the game but can continue to vote for people who want increase taxes except for themselves that system will be bad for society.

The rich should pay more because they have more, the middle class should pay some as well but those under $50,000 should pay something or at the very least not get a "refund" while having no tax liability.

Exxon-Mobil and Goldman Sachs et. al. should also not have a $0 tax liability as well they sould be paying their share as well.

Nemont

 

[trevore]

I'm all for a flat tax. I'm with most, I think, when I can deal with the zero tax liability, but when they rec a "refund" without paying in, Hmmmmmm.

I don't think qualified CPA's would be out of a job. There are plenty of peeps who would still have zero desire to deal with filing a tax return. Plenty of stuff going on in the industrial sector to keep 'em busy. It would probably displace some book keepers and all those temps that file taxes for HR, Jackson Hewitt, etc.

And I always pay april 15. I've rec'd one refund in my entire working life. I think it was less than $50.