Help me out here. In listening to one of the TV news shows, the percentage of people who do not pay taxes is about 38%.
But when they were stating what goes into that number, it includes people who get a tax refund. Is that true ?
The reason I ask it, I know a lot of people ( including myself when I was a younger, single guy), who have the most taxes taken out of their check because they like to get the refund in the Summer since it is a nice chunk of change to blow on the necessities of life.
Others I know actually use it as a 'savings plan' ( although I continue to tell them why give the Gov't more money each pay) their reasoning is that they don't want to pay at the end of the year and they just bank the refund check when they get it.
If it's true that people who get refunds are counted as not paying taxes, isn't that a little skewed because they do have a federal tax deduction taken from their pay check.....actually MORE than they should.
I don't really get what you are saying. I don't know the percentage of people who claim "00" in their W-4 but I'd assume that a good chunk of those people get a bunch back but still don't get all of it back which means they pay.
Maybe some of the resident accountants can chime in.
people who get refunds are paying taxes. they just paid more in during the year than they needed to. the line that counts is line 63 on page 2 of your 1040 "total tax". this is your federal income tax liability for the year. below this line they subtract your payments, which is your withholding and any extra payments you make during the year. so you may end up with a refund, but you still paid taxes.
I understand all about the W-4 and 1040...my question was, is it true that the people who get refunds are counted in the equation that determines how many people do not pay taxes.
I was wondering if any one else heard that because I thought I heard that on one of the wonderful news channels.
If it is true, then doesn't that really skew the number. I mean, when I hear people stating that 38% of the people don't pay taxes, do they realize that people who get a refund are part of that number ( assuming it is true) ?
That is the controversial aspect of this tax plan and why many are so upset with it.
But here's the deal: not everyone pays income tax. But everyone who works does pay payroll tax. Still it's not entirely clear that the tax credit some who don't pay income tax will receive won't more than offset the payroll tax they do pay.
At least as far as I can tell. So, yes, people may get more than they should. The net result may end up essentially being a cash gift.
The difference is between 'tax credit' and 'refundable tax credit'.
Most tax credits will reduce your tax liability to zero (hope/lifetime college creditfor example). The EIC and CTC are factored in after all the other credits are, and can potentially leave you with getting someone elses money.
You cannot get more money refunded that you pay in.
RJ has already proven himself to be a liar on more than one occasion by spouting off incorrect information that a CPA should know. The IRS website clearly says what each of these credits are and how they affect taxable income.
Even when I was a broke-ass, single income, married, enlisted marine (making about $12K) with two kids I did not get back more than I paid in -- and I qualified for every credit there is.
I got a refund because I essentially owed no taxes but I never got more than I had with-held. Anyone who can read a form 1040 and do simple addition/subtraction can figure this much out.
I wouldn't trust RJ to fill up my gas tank let alone to fill out a simple tax return for me.
Well no shit! If you pay in more than you owe you get something back.
But that's not what you said or meant. You wrote:
You are insinuating that a credit either gets added to the amount actually paid in or that it is a direct disbursement from the IRS (a welfare check). Where does the extra $5710 come from? Please show me where on form 1040 it allows for a negative "amount owed".
Take my example to any qualified tax professional. Hell, just call them on the phone. They will tell you exactly the same thing I said. The actual refund may be off a bit, as I did it in my head - but not materially different than the $6510.
The Earned Income Tax Credit goes on line 66a of the 2007 form 1040 (pretty fucking easy to find since it says "Earned Income Tax Credit)
$400 of the The Child Tax Credit will take care of the $400 tax. The balance of the $1000 per child credit ($1600) goes on line 68.
If you would take the time to actually look at the tax return, you would see that line 72 called "Total Payments", and is the total of the preceding section, to include amounts with held from your pay check, the EIC, and any additional child tax credit.
None of the above. Unlike you, I actually know what the fuck I am talking about.
But don't take my word for it. A simple search on the IRS website turned up this article.
Read the first paragraph of the IRS link. No - wait. You are probably too fucking stupid to do that. Let me just post it here:
Taxpayers should consider claiming tax credits for which they might be eligible when completing their federal income tax returns. A tax credit is a dollar-for-dollar reduction of taxes owed. Some credits are refundable - taxes could be reduced to the point that a taxpayer would receive a refund rather than owing any taxes.
Please read the bold phrase several times.
It is pretty sad that you fucked your family because of your utter fucking stupidity - if you even have a family.
i dont know what else to tell you but you're wrong. i am a cpa as well. i just punched in his numbers and his scenario into my tax program and his numbers were just about right. my tax program is updated on a weekly basis to keep up with the current tax law. his numbers were a little bit off but not much. you can get more than you withheld if you qualify for the refundable tax credits. thats the current tax law.