a question on taxes in America

I had a girlfriend that got more in a refund than she paid in her federal tax somehow.  The feds were paying her...  There is a loophole somewhere that needs to be closed.  I think she "made up" business losses  to extreme, that the refund was more than she paid...

I smelled fraud, and put some distance between us.

It's called Earned Income Tax Credt.

Yeah I know it's wikipedia but it is easier to understand than IRS gobblety gook.

http://en.wikipedia.org/wiki/Earned_income_tax_credit

I'm with you.  Unfortunately, we have an entire class in our country that have been taught that they "deserve" to get more than they paid in, and we have an entire political party that's doing everything they can to give them more so they keep voting for said political party.

BTW, 99% of my family falls into the category you mention.  I'm the black sheep of my family.  As in, I have a job and pay taxes.

You mean I am not the only white sheep in a family of black sheep??? though I should add my mother always tried hard but is one of those people who never got anywhere due to a lack of opportunities or at least not seizing opportunities when she was young.

It is so hard getting together with my family and hearing about all of their problems that are in many ways self inflicted (sister complaining she can't afford to buy diapers for the baby - but don't dare ask her why she keeps having kids in the first place!)

Sorry - I guess I am in a ranting mood today. Thinking about the Fourth of July and the independance that Holiday represents, it seems we have gone backwards a very very great deal.

Outside of the EIC income range, some of us just have a lot of deductions.

I could adjust my deductions up front so that it's more even, less of a refund at the end of the year, but it doesn't bother me. Maybe if interest rates go up from spit, I'll be bothered to change it.  But as it is, I time a big charitable contribution around the refund.  Voila: on my way to next year's refund.

For others it's a mortgage, child care, etc. -- whatever we have chosen to prioritize via the tax code.

Deductions don't cause you to get actual money from the government.    Credits do.  And only some credits. (refundable vs non-refundable)

You're talking about getting your withholding back.  This thread is about people who get their withholding back, plus some amount.  

Withholding is not taxes.   The fact that the government gets so many people excited about tax day because they get their own money back, while not focusing on the actual amount that they're being taxed, is one of the greatest scams of all time!  (I hope my high school english teacher never reads that sentence)

This is so true.  If we got rid of withholding and made everyone write a check on April 15th there would be far more ticked off people when they realize how much $ goes to the government.

Do you really believe that? I don't write a check out to Uncle Sam... but then again I don't write a check out to anyone. I know exactly how much I make, and I know exactly how much is taken out. And all those deductions are real and I try to make them as small as possible. But it is still a very noticable chunk of my pay.

Then I never have cash any way. All my bills are paid electronically, most of them automatic. All I see is a monitor screen of numbers and it goes up every two weeks and then down. I'm not really trying to argue a point, it is just that I hear the statement a lot. I do understand the point, but how is it any different than anything else? The vast majority of employers now do direct deposit and most people's money has gone electronic. I don't really see my tax bill different than any other. I argue those bills too to get them down as much as possible. Just because it is electronic does not mean I like paying more.

Do you remember having your first job, and getting that first paycheck? You figured out ahead of time how much money would be in the check, based on the hourly rate. Then the check shows up with significantly less. You realized from your first paycheck how much goes to government (federal, state, and local). The only difference is that as a grown up, you simply come to expect it. 

I've had years where we owed money and paid a check on April 15, and I've years where we got money back. I'd rather overpay than underpay, since I don't have to budget for another payment of some kind. If you would rather underpay, increase your payroll deductions and keep more cash. 

As far as the subject... like has been said, credits. But what I find amazing is why is it we need to subsidize kids? I mean the same can be said why my mortgage needs to be tax deductible. The tax code gives incentives for things like home owners and charitable contributions, but why kids? I mean are we going to stop having kids if there is not a tax break? Do we really need to give incentives to have larger populations? Is there a people shortage?

I don't have kids, yet I still pay taxes that support them. I still pay for schools and lunches, and what not, even though I have none. Then on top of that I still have to subsidize those that do. I have several coworkers with more than 5 kids. They pay very little in taxes, while me and my childless counterparts pay full. How about if we only gave deductions up to two kids? Not like China and no Federal support, just max out deductions at two dependents?I'm not trying to tell families how many kids they can have, but I don't see why I need to pay for 7 of them.

My two oldest kids have just recently experienced this very thing.  It's kind of humorous to see the look on their faces when they get that first paycheck.

Nah. I just write random things...

Yes I believe it.  A large portion of the population just see the bottom line take home #.  They never look at how much they pay in taxes.  Never really look at their withholding or deductions and then celebrate when the IRS gives them back their own money in April.

You see it all over the place and it sort of sucks if you're not a parent.  Most areas use property tax to pay for K-12 schools, rather than simply taxing the people who have kids.  THEN they get a deduction on their federal income tax per child amongst other things.

I'd support schools anyhow because I put a high value on education but it really isn't a fair system.

Its kind of like people who have trouble spending money at home.  Financial experts recommend pulling the cash out and sticking it in an envelope so you know how much you're spending so psychologically you spend less.

So, I agree that if people did have to write a check it would open up their eyes a lot more.  However, most people are so irresponsible financially speaking, that the government tax inflows would probably fall by half if they were to implement this plan.  lol

A quality school system benefits ALL property owners in that jurisdiction - ie improves your property value because people (with kids) want to live there.  Take a look at a locality with "bad" schools.

And where exactly did your education come from?

Do you not owe society something for having educated you?

I was home schooled all my life and I don't have kids. Where do I sign to opt out of paying for schools?

And of course you got your degree from a 100% private school...

And to answer your question: I don't know the same place my opt out is for things I don't use but my taxes go to pay for, hings that I see as a public good such as libraries and parks and bike trails even if I don't use them.

Actually I think THEY owe ME a tax deduction for other people's kids...

Yup I did go to a private college. You asked, sorry I don't fit into your generalization.

Heh heh tell you what I will give you my deduction if you take my son for the summer and feed him.  He is 15 so that should eat through that deduction pretty quicky.