Earned Income Credit

[airdvr 200]

An example of just how fucked up our tax system is. How does one justify getting a tax return for more than they paid in?

Please don't dent the planet.

Destinations by Roxanne

[quade 3]

This is almost entirely for the benefit of extraordinarily low income families with children. While it can also benefit adult individuals with incredibly low incomes, the income level is set well below the poverty level if it is being applied to adults.

This is an almost meaningless amount of money in either case, but it is not nothing so, I guess you can whine about it if you really want to.

quade -
The World's Most Boring Skydiver

[BIGUN 1,106]

quade

This is almost entirely for the benefit of extraordinarily low income families with children. While it can also benefit adult individuals with incredibly low incomes, the income level is set well below the poverty level if it is being applied to adults.

This is an almost meaningless amount of money in either case, but it is not nothing so, I guess you can whine about it if you really want to.

Quade: Your response about whining was uncalled for as a moderator and an opportunity to educate from your side of the aisle; rather than berate. Everything posted anymore just seems to cause you agitation. I do applaud your diligence and duration, but perhaps it's time to take a break. We've all done it at some point.

To the OP: The cap on the EIC is about $51K dependent on the number of children (not sure what it is this year). And, it is no more than a credit posted against adjusted gross income. Not unlike those who own a house get to adjust their income with tax credits based on interest paid. The difference being is that it is an incentive for... e.g., a married couple with kids (say both earn ~$24K/ annum) to continue working. I would encourage you to Google it for more info than I'm providing below. But, do know this. There are many single or married couples that would rather get off public assistance OR work than accept public funding and this allows them to do it.

The saddest part about this program is that only about 40-50% of the people who qualify actually take it because they don't know about it, nor how to do more than a standard 1040 EZ. Then, when they do find out about it; rather than try to understand it (or maybe not have the ability to understand the process)... they wind up going to those store front tax preparers who absorb "most of" or "more than" it in tax preparation fees, those instant return loans or both.

"The EITC is designed to encourage and reward work. As noted, a worker’s EITC grows with each additional dollar of earnings until reaching the maximum value. This creates an incentive for people to leave welfare for work and for low-wage workers to increase their work hours.
This incentive feature has made the EITC highly successful. Studies show that the EITC encourages large numbers of single parents to leave welfare for work, especially when the labor market is strong.

Specifically, a highly regarded study found that EITC expansions are the most important reason why employment rose among single mothers with children during the 1990s — the EITC was more effective in encouraging work than either welfare reform or the strong economy. The Committee for Economic Development, an organization of 250 corporate executives and university presidents, concluded in 2000 that “The EITC has become a powerful force in dramatically raising the employment of low-income women in recent years.”

SOURCE: http://www.cbpp.org/cms/?fa=view&id=2505

Nobody has time to listen; because they're desperately chasing the need of being heard.

[chutem 0]

It's not a credit posted against adjusted gross income it's a refundable tax credit.

[BIGUN 1,106]

chutem

It's not a credit posted against adjusted gross income it's a refundable tax credit.

1. And, it is no more than a credit posted against adjusted gross income. 2. Not unlike those who own a house get to adjust their income with tax credits based on interest paid.

Yeah, I can see where I fucked that up.

1. It is a refundable tax credit, posted against adjusted gross income.

2. Was trying to make the point of different types of tax breaks for everyone.

For those interested... IRS PUB 596: http://www.irs.gov/pub/irs-pdf/p596.pdf

Nobody has time to listen; because they're desperately chasing the need of being heard.

[turtlespeed 212]

quade

This is an almost meaningless amount of money in either case, but it is not nothing so, I guess you can whine about it if you really want to.

WOW!

Look - You have his permission!

OUTSTANDING!

I'm not usually into the whole 3-way thing, but you got me a little excited with that. - Skymama
BTR #1 / OTB^5 Official #2 / Hellfish #408 / VSCR #108/Tortuga/Orfun

[kallend 1,679]

I feel far better about helping out poor people than I do about giving special breaks to billionaire hedge fund managers.

...

The only sure way to survive a canopy collision is not to have one.

[rushmc 18]

turtlespeed

***

This is an almost meaningless amount of money in either case, but it is not nothing so, I guess you can whine about it if you really want to.

WOW!

Look - You have his permission!

OUTSTANDING!

Not surprising
the left fully supports wealth redistribution

Of course when those on the right say something about this they claim we do not care and hate the poor

Far from it, I have no problem with helping those in need
I do have a problem of funding the lazy who live off the government

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[turtlespeed 212]

rushmc

******

This is an almost meaningless amount of money in either case, but it is not nothing so, I guess you can whine about it if you really want to.

WOW!

Look - You have his permission!

OUTSTANDING!

Not surprising
the left fully supports wealth redistribution

Of course when those on the right say something about this they claim we do not care and hate the poor

Far from it, I have no problem with helping those in need
I do have a problem of funding the lazy who live off the government

But you have to be compassionate to those who want to live off others.

I'm not usually into the whole 3-way thing, but you got me a little excited with that. - Skymama
BTR #1 / OTB^5 Official #2 / Hellfish #408 / VSCR #108/Tortuga/Orfun

[BIGUN 1,106]

turtlespeed

But you have to be compassionate to those who want to live off others.

Before we drift too far. This is about keeping those who are at the level of poverty from resorting to public assistance or giving those on public assistance an incentive to get off of it. It's not perfect, but it does help.

And, before we jeer too much... How many times have we read about the 7,000 millionaires so adept at the tax laws that they pay no income tax.

http://www.businessinsider.com/7000-millionaires-paid-no-income-tax-2012-9

Nobody has time to listen; because they're desperately chasing the need of being heard.

[turtlespeed 212]

BIGUN

***But you have to be compassionate to those who want to live off others.

Before we drift too far. This is about keeping those who are at the level of poverty from resorting to public assistance or giving those on public assistance an incentive to get off of it. It's not perfect, but it does help.

And, before we jeer too much... How many times have we read about the 7,000 millionaires so adept at the tax laws that they pay no income tax.

http://www.businessinsider.com/7000-millionaires-paid-no-income-tax-2012-9

Then I suggest more self motivation and education.

Education is good, right?

I'm not usually into the whole 3-way thing, but you got me a little excited with that. - Skymama
BTR #1 / OTB^5 Official #2 / Hellfish #408 / VSCR #108/Tortuga/Orfun

[BIGUN 1,106]

One should never pooh pooh a good education.

Nobody has time to listen; because they're desperately chasing the need of being heard.

[billvon 2,471]

>Education is good, right?

Some of us think so.

[wayneflorida 0]

kallend

I feel far better about helping out poor people than I do about giving special breaks to billionaire hedge fund managers.

I just read Buffet legally evaded 400 million of taxes due to special tax laws. And that is fine, the supreme court says so.

But just don't stand next to the President and say the rich need to pay more taxes. Fork tongue.

[jclalor 12]

wayneflorida

***

I feel far better about helping out poor people than I do about giving special breaks to billionaire hedge fund managers.

I just read Buffet legally evaded 400 million of taxes due to special tax laws. And that is fine, the supreme court says so.

But just don't stand next to the President and say the rich need to pay more taxes. Fork tongue.

Because we all know what a tight ass Buffet is.

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

[kallend 1,679]

jclalor

******

I feel far better about helping out poor people than I do about giving special breaks to billionaire hedge fund managers.

I just read Buffet legally evaded 400 million of taxes due to special tax laws. And that is fine, the supreme court says so.

But just don't stand next to the President and say the rich need to pay more taxes. Fork tongue.

Because we all know what a tight ass Buffet is.

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

If I make an extra $1000 this year, $396 of it will go in extra federal income tax. A billionaire making an extra $1000 this year will likely pay somewhere between $0 and $160 in extra income tax.

...

The only sure way to survive a canopy collision is not to have one.

[kelpdiver 2]

jclalor

***
I just read Buffet legally evaded 400 million of taxes due to special tax laws. And that is fine, the supreme court says so.

But just don't stand next to the President and say the rich need to pay more taxes. Fork tongue.

Because we all know what a tight ass Buffet is.

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

There's no question that he's vigorously opposed to giving to the government. Many argue that a key reason why Bershire hasn't issued a dividend since 1967 is that as the man owning about a third of the stock, that would result in quite a tax bill each year. By drawing a very small direct salary (100k + 386k IIRC for security), he postpones the realization of gains.

And should he die before his wife, she will become the sole owner of all of these shares at a stepped up value of the stock at his date of death, so that postponed tax bill will never be due.

[kelpdiver 2]

BIGUN

And, before we jeer too much... How many times have we read about the 7,000 millionaires so adept at the tax laws that they pay no income tax.

http://www.businessinsider.com/7000-millionaires-paid-no-income-tax-2012-9

note the final column on the left...these 7000 millionaires represent 1.6% of the cohort. As opposed to > 80% in the two lowest groupings.

And if people want to complain about the lying around saying that 47% don't pay (income) taxes, ignoring FICA and sales taxes, then it's at least as underhanded to do it here. These millionaires may not be paying income taxes, but the capital gains or dividend taxes start at close to 200k.

[kelpdiver 2]

kallend

If I make an extra $1000 this year, $396 of it will go in extra federal income tax. A billionaire making an extra $1000 this year will likely pay somewhere between $0 and $160 in extra income tax.

0% applies to long-term gains and dividend income if a person is in the 10% and 15% tax brackets,
15% applies to long-term gains and dividend income if a person is in the 25%, 28%, 33%, or 35% tax brackets, and
20% applies to long-term gains and dividend income if a person is in the 39.6% tax bracket.

I see...if they can manage to keep all proceeds outside of the income category, then they can stay at 0. But if they can't, it goes up to 23.8% in a hurry.

[airdvr 200]

kallend

*********

I feel far better about helping out poor people than I do about giving special breaks to billionaire hedge fund managers.

I just read Buffet legally evaded 400 million of taxes due to special tax laws. And that is fine, the supreme court says so.

But just don't stand next to the President and say the rich need to pay more taxes. Fork tongue.

Because we all know what a tight ass Buffet is.

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

If I make an extra $1000 this year, $396 of it will go in extra federal income tax. A billionaire making an extra $1000 this year will likely pay somewhere between $0 and $160 in extra income tax.

So this isn't really about helping the poor for you...

Please don't dent the planet.

Destinations by Roxanne

[BIGUN 1,106]

kelpdiver

***
And, before we jeer too much... How many times have we read about the 7,000 millionaires so adept at the tax laws that they pay no income tax.

http://www.businessinsider.com/7000-millionaires-paid-no-income-tax-2012-9

note the final column on the left...these 7000 millionaires represent 1.6% of the cohort. As opposed to > 80% in the two lowest groupings.

And if people want to complain about the lying around saying that 47% don't pay (income) taxes, ignoring FICA and sales taxes, then it's at least as underhanded to do it here. These millionaires may not be paying income taxes, but the capital gains or dividend taxes start at close to 200k.

Well, let's not make it sound as though there aren't any tax strategies against deferring capital gains.

Nobody has time to listen; because they're desperately chasing the need of being heard.

[DrewEckhardt 0]

kelpdiver

I see...if they can manage to keep all proceeds outside of the income category, then they can stay at 0. But if they can't, it goes up to 23.8% in a hurry.

1. Capital gains in a Roth IRA are tax-free which makes such accounts a nice place for high-risk high-return investments like venture capital by way of self-directed accounts.

While contributions are limited to about $5,500/year (+$1000 for the over 50 crowd), you can roll SEP IRA ($52K/year) and 401k accounts ($17,500 + $5,500 catchup past age 50) over into Roth IRAs by paying the taxes.

2. Only 50% of Qualified Small Business Stocks gains are taxable which makes the effective rates 14% for Capital gains and 1.9% for the ACA surtax on the first $10M.

3. Government bonds are tax-free.

[kallend 1,679]

kelpdiver

***
If I make an extra $1000 this year, $396 of it will go in extra federal income tax. A billionaire making an extra $1000 this year will likely pay somewhere between $0 and $160 in extra income tax.

0% applies to long-term gains and dividend income if a person is in the 10% and 15% tax brackets,
15% applies to long-term gains and dividend income if a person is in the 25%, 28%, 33%, or 35% tax brackets, and
20% applies to long-term gains and dividend income if a person is in the 39.6% tax bracket.

I see...if they can manage to keep all proceeds outside of the income category, then they can stay at 0. But if they can't, it goes up to 23.8% in a hurry.

39.6 > 23.8 when I went to school.

...

The only sure way to survive a canopy collision is not to have one.

[kallend 1,679]

airdvr

************

I feel far better about helping out poor people than I do about giving special breaks to billionaire hedge fund managers.

I just read Buffet legally evaded 400 million of taxes due to special tax laws. And that is fine, the supreme court says so.

But just don't stand next to the President and say the rich need to pay more taxes. Fork tongue.

Because we all know what a tight ass Buffet is.

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

If I make an extra $1000 this year, $396 of it will go in extra federal income tax. A billionaire making an extra $1000 this year will likely pay somewhere between $0 and $160 in extra income tax.

So this isn't really about helping the poor for you...

Of course it is. The aid to the poor has to come from somewhere.

Your grasp of economics is rather slim.

...

The only sure way to survive a canopy collision is not to have one.

[billvon 2,471]

>If I make an extra $1000 this year, $396 of it will go in extra federal income tax.
>A billionaire making an extra $1000 this year will likely pay somewhere between $0
>and $160 in extra income tax.

That is true if you do no accounting tricks and the billionaire does many.

If you do the same accounting tricks and the billionaire does none, then you won't be paying anything and the billionaire will be paying $396.