General discussion

are you getting something for nothing?

This is only for income taxes. Everyone still pays a lot of taxes for sales tax, property tax, value added taxes, excise taxes hidden in product prices, gasoline taxes, cigarette taxes, liquor taxes, import taxes (which is where the founding fathers expected the federal govt to be supported from, called "tariffs") FCC taxes on phones, and probably many others I can't think of right now.

http://hosted.ap.org/dynamic/stories/U/US_NO_TAXES?SITE=WBAL&SECTION=NATIONAL&TEMPLATE=DEFAULT

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.

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Comments
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RE: they get more money in tax credits
they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

The $2,800 in credits exceeds the $2,769 in taxes, so the family makes a $31 profit from the federal income tax.


Does "sends them a payment" and "make a profit" mean that

IF you have more tax credits than you paid taxes, the Government will send you a check for the difference?

or are they just twisting words?

I can see receiving a cheque if too much tax was deducted at the source , but WHY would the Government pay you because you didn't use up all your credits?
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yes

You can get back all the money you paid in income tax and then get some extra,if you qualify.

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RE: All the money

IF you get back ALL the money, then there is something wrong (or bad information provided by employee) with the way they calculate the amount of taxes to be deducted at the source.

You could pay NO taxes?

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I mispoke...I get ALL my taxes back also.

I also pay no income tax. But we don't get a refund of a tax credit. If you don't pay, you don't get it back.

Making smaller tax brackets would eliminate your/US problem.

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(NT) You mean tax the lower middle class?
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Hell, tax the poor!

When you tax something you get less of it; when you subsidize something you get more of it. So, if you don't like poverty, tax it. Remove the incentives to being poor.

I am dead serious.

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Here's a 1040EZ showing that.
http://www.glenburniemd.net/Fake1040EZ.jpg
This married person who didn't itemize, but used the 1040EZ, still managed to get $300 more back from the govt than he paid in taxes. To make it easier to see, I had him receive perfect withholding so what he had withheld for taxes by employer was exactly what he owed.

If you used a 1040A, and the income was even greater, but the person had 2 children and one was in college and eligible for a Hope Credit the amount returned above the amount taxed would be even greater.
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That same person in New Brunswick would get
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$124 was for a single person

married would get $90

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My daughter had this happen

It's the first year I didn't declare her as a dependent although she still gets a fair amount of help from us. Not only did she get back more than was withheld but later got a letter noting that it appeared she qualified for the "earned income credit" but hadn't taken it. Actually, I'm the one who filled out her tax form and I completely missed that one...didn't even know it existed. Anyway, it looks like she's going to get back even more once the form is re-processed. What a country!

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Schedule M
It's not so surprising that Dobrow wasn't familiar with the Making Work Pay credit. It was part of President Barack Obama's economic stimulus package that was signed into law more than a year ago. The credit basically put up to $400 extra into a worker's paychecks - $800 for joint filers - by lowering the amount the employer withheld for taxes. For some, it meant $10 or so more each paycheck - something easily overlooked and spent.

The full credit starts to phase out once income exceeds $75,000 for singles and $150,000 for joint filers.


http://articles.baltimoresun.com/2010-03-21/business/bal-bz.consuminginterests21mar21_1_economic-recovery-payment-schedule-social-security

From what I've heard on the news, this one has been missed a lot. Also, some paying back student loans have missed out on some changes, but I don't recall what they are.

Angeline
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Well, the "making work pay" credit I'd already figured in

and that's what already got her more than was withheld. It was the IRS that noticed she'd missed the earned income credit which is for persons who make below some threshold amount. I'd heard of this credit but just never bothered to check into what it really was. I knew she wasn't going to owe any tax but never figured she'd be paid for being "poor".

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LOL, just be glad...

...she wasn't being paid for being pregnant! Of course that would be "Making Babies Pay" instead of "Work". Wink

Yeah, when through that with one emancipated daughter. I made her do the form first, then I QC it. She totally skipped right over the credit. I asked her why. She said, "I did'nt know what it was, so didn't think it applied to me". Females. So, I adjusted and got her another $400 knocked off her taxes, and told her to RTFM in the future. I think she learned the lesson. I hope.

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For a very long time...

the overwhelming majority of taxes have been paid by the hated "rich". This is from 2007, but nothing much has changed except the "rich" are getting soaked even more....

http://www.taxfoundation.org/news/show/22652.html

If you ask most people I'd bet they think the middle class is paying the most and the evil rich are getting away with paying little or nothing.

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Those in the top brackets make most of the money

The earned income credit is for low-income workers esp. those with children. It rewards working and earning an income rather than just sitting and collecting welfare. It helps them make up for working at low-paying jobs. There are income and age restrictions.

Diana

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Th etop brackets make teh mnost money...

that goes without saying, but does it justify robbing them? I think the mentality is, "There's a pile of money.... gimme!"

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RE: "There's a pile of money.... gimme!"

That makes more sense than

There's no money here....let's take it.

You can't get blood out of a turnip?

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Have wealth other than money.

Gold, Silver, Jewels, Land, etc. Anything that can be put away other than in a bank who reports it all to the govt. Large garden which provides food cheaper than buying in store not only saves on food cost, but allows lower dollar income which means less income tax paid. You help me, I help you arrangements for exchange of labor is a further way to cut down on income taxes. While barter can be taxed, in reality the govt pays almost all it's attention to dollar denominated transactions since that's the easiest to track. For instance, mowing a neighbor's yard for a season if he puts the new shingles on your house is a service for both of you, but virtually untraceable and therefore nontaxable. If he paid someone to mow his yard, he'd have to pay tax sales tax on services in some states, not to mention use money that tax has already been collected on. If you pay someone to put on the shingles you have to pay the service sales tax, added cost to his wages to cover his SS and Medicare costs, etc. Direct exchange of labor/service is very saving come tax time. No money transactions take place, no taxes on your labor or his, and both receive something beneficial, tax free.

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Just don't get caught

Technically, you are still supposed to pay for and count as income services rendered.

Diana

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I think that only applies for trading professional services

If one neighbor is a landscaper and the other a roofer, trading those services becomes a dicey proposition as there's a way to put some dollar amount to their value. I know a teacher who would trade tutoring for home repair and yardwork. I think she was risking disaster if one of the parents got angry with her. Hobbyists, and folks who are just handy or skillful at something shouldn't have a problem. I like the idea of bartering between family and neighbors and don't see why it needs to be hidden from the IRS. It's a social skill that should be encouraged, IMO, to help solidify a community.

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Unfortunately, the IRS considers bartering as taxable income

whether that's your real job or not.

Diana

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But, as I read examples,
http://www.irs.gov/businesses/small/article/0,,id=215975,00.html

"For example, if a doctor agrees to give an accountant a personal medical exam in exchange for personal tax return preparation, the fair market value of the medical exam is taxable to the accountant, and the fair market value of the tax return preparation is taxable to the doctor."

all I see is exchange of good and services that are a part of ones trade or profession. I don't see this as meaning trading baby sitting for lawn mowing between neighbors who weren't otherwise making a living doing such. That would be a bit too much.
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A bit too much? probably

so, but when has the government had trouble swallowing a camel and choking on a gnat?

My nonprofessional understanding is that any barter has a monetary value, as common labor if nothing else, and is technically taxable.

Heck, that may even include exchanging back rubs with your spouse the way the government works.

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(NT) To those whom much is given, much is required
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No

Those in the top 5% AGI pay more than 60% of the total tax revenue collected by the government. IOW they are responsible for 60% of the nations budget while the remaining 95% enjoy the services paid for by the top 5%. They are being robbed at gunpoint. The government is effectively a real live Robin Hood.

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(NT) The top 5% make more than 60% of the income
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So

Why should that entitle anyone else to it?

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I wonder if they still do this scam?

Work the low income job for 6 months to qualify for unemployment benefits, then goof off badly so they can get fired and collect that for next 6 months? I remember that happening in the 70's in Florida, but don't know if the laws would let it still happen today. I suspect it is still an option.

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(NT) Depends on if you can survive on 50% of a low-paying job

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