Working for Nothing

[Snaggletooth]

Client, married, two kids. Rents. W-2 for $15,000. Doesn't work half the time.

Next client, married, two kids. Rents. W-2 for $37,000. Works every chance he gets.

Is it just me, or is the second guy working for nothing considering the amount of taxes and refundable credits involved??

[ChEAr$]

Client, married, two kids. Rents. W-2 for $15,000. Doesn't work half the time.

Next client, married, two kids. Rents. W-2 for $37,000. Works every chance he gets.

Is it just me, or is the second guy working for nothing considering the amount of taxes and refundable credits involved??

Question is, whether he would be getting all those credits without kids and working,
since EIC is based on earned income and so is the Making work pay credit.

[Bert73]

Client, married, two kids. Rents. W-2 for $15,000. Doesn't work half the time.

Next client, married, two kids. Rents. W-2 for $37,000. Works every chance he gets.

Is it just me, or is the second guy working for nothing considering the amount of taxes and refundable credits involved??

The second guy hopefully is socking away some of his dough for a rainy day. He has so much more wiggle room when it comes to his finances, than the first guy. He might not be the all time winner of a huge refund but he probably can meet his daily needs.
The first guy is barely making ends meet and has two children to feed, clothe and educate for along time.

[erchess]

I think

the point of OP was that after taxes the guy who worked a lot less came out even with or perhaps slightly ahead of the guy who worked every chance he got. Many Americans have a problem with that. I am not among them.

[RitaB]

I know what you mean!

Client, married, two kids. Rents. W-2 for $15,000. Doesn't work half the time.

Next client, married, two kids. Rents. W-2 for $37,000. Works every chance he gets.

Is it just me, or is the second guy working for nothing considering the amount of taxes and refundable credits involved??

I did a return for a nice family where the husband works and the mom stays home. All three kids are in public school, so mom COULD work, even if part-time, and the kids wouldn't be affected all that much, in my opinion. Anyway, he made $25,000. They had no liablity, plus received $8400 in credits. So, what incentive is there for them to make more money?

It was kind of depressing to me, really. I hate to say that, but I am working my tail off, paying taxes, and it appears that I am being penalized for having some ambition.

[WhiteOleander]

I had a married couple, two kids, receive a 2500 refund. The wife said that is not enough. Her friends are getting 7000-8000 back and she wants the same. I tried to tell her that w/o looking at their returns, i couldn't be certain what the differences were. However, the friends were probably earning in the neighborhood of 25000 to get the max for EIC. I told her even with the large refund, her friends were way below her household income. Her friends did not have nearly as much disposible income.

Wife did not care. Said it wasn't fair. Wanted me to file them each HOH with one chuld so their EIC would increase. I refused. They left.

[erchess]

Rita

I have two thoughts for you to consider.

First let's look at that $8,400. School is in session 3/4 of the year at best and without incurring child care expenses she could only work school days and school hours. What would her rate of pay have to be to replace the $8,400 and what are her odds of getting a job with that rate of pay? The truth is that I don't think most two parent families come out economically ahead by having two incomes.

Second let's compare what that family has versus what we on this board have. The man in that family is more likely than not never going to increase his paycheck above the rate of inflation and when he retires he's unlikely to have much more than Social Security to live on. Most of us on this board have or will eventually have good retirement plans and higher rates of pay than this guy.

[BP.]

Client, married, two kids. Rents. W-2 for $15,000. Doesn't work half the time.

Next client, married, two kids. Rents. W-2 for $37,000. Works every chance he gets.

Is it just me, or is the second guy working for nothing considering the amount of taxes and refundable credits involved??

That could be one person's short term view, but factor in things like SS earnings credits; health ins coverage for guy 2 & family; an earnings record for future credit needs (house, car) or for unemployment benefits; a job & salary history for future employment; a good example to his kids; and that priceless self respect. Guy 2 is way ahead in the big picture.

[David1980]

Client, married, two kids. Rents. W-2 for $15,000. Doesn't work half the time.

Next client, married, two kids. Rents. W-2 for $37,000. Works every chance he gets.

Is it just me, or is the second guy working for nothing considering the amount of taxes and refundable credits involved??

Looks like a $6,200 difference on their fed return (assumed EIC/HOH). Given the choice, I'd rather earn $22,000 more and pay $6,200 more in taxes.

Even if you add a state to the mix, I think the higher income individual is ahead.

[MAJ]

Not Working and getting everything...

Don't get me started on this topic - Seriously...
Who said the one earing $37k should be putting some money away? Am I missing something? How could he/she? With 2-3 kids - That's be impossible.

I have a client - He is on SSDI but I am convinced he's working some where - He has to be! The wife bartends and claims what she makes - No W2 - No 1099 - They usually end up with EIC. Public assistance for the kids health benefits. Braces, whatever they need - Free & on me! They have a nice home - He bought a Harley - They've been to Vegas and Bahamas...

Me? Work like a dog - No Harley - No Vegas - No Bahamas. Burns my arse..... it does...
Oh.. He has a nice corvette too... What am I doing wrong?

I am convinced the more I make the less I have -- IF I stop working I should be well off!
This client is the perfect example... Am I jealous... Of course I am.... Sometimes I want to follow some of my suspect clients around to see what they are doing and turn them in!!!!

Venting over.. Waiting for them to come this year with the tighter EIC due dillegence... Great!

[RitaB]

Good points

I have two thoughts for you to consider.

First let's look at that $8,400. School is in session 3/4 of the year at best and without incurring child care expenses she could only work school days and school hours. What would her rate of pay have to be to replace the $8,400 and what are her odds of getting a job with that rate of pay? The truth is that I don't think most two parent families come out economically ahead by having two incomes.

Second let's compare what that family has versus what we on this board have. The man in that family is more likely than not never going to increase his paycheck above the rate of inflation and when he retires he's unlikely to have much more than Social Security to live on. Most of us on this board have or will eventually have good retirement plans and higher rates of pay than this guy.

I agree with everything you said.

There's no incentive for her to work. They would not be better off. Even without the credits, there is a cost to go to work every day. You know, clothes, gasoline, taxes, etc.

And, really, I am all for mom getting to stay home, but I am a little resentful that my tax dollars are subsidizing that choice. If they can make that choice without ME footing the bill, it's way easier for me personally to be happy about it.

And yes, we will have more than they when we retire, but we DID work awfully hard for it.

Hope I don't sound terrible. I am all for helping people that NEED help. Please don't anybody get offended at me, but I think our government needs to back off with the credits that encourage mediocrity (or less). If people are happy with mediocrity, that's fine. I just don't want to be an enabler.

Peace and blessings! Love you guys like a fat kid loves cake! Are we good?

[RitaB]

But wait, there's more

I just remembered a parent who was just beside herself last year because she didn't get EIC. She drew unemployment and then sat around eating Cheetos. (Well, OK, I'm not sure she likes Cheetos.) She actually said, "Wow, I wish you had told me. I would have worked some."

Excuse me?!

Edit: Wait, that's a bad example. In her case, EIC would encourage working, if the "taxpayer" understood what the "E" stands for...

[David1980]

I just remembered a parent who was just beside herself last year because she didn't get EIC. She drew unemployment and then sat around eating Cheetos. (Well, OK, I'm not sure she likes Cheetos.) She actually said, "Wow, I wish you had told me. I would have worked some."

Excuse me?!

Edit: Wait, that's a bad example. In her case, EIC would encourage working, if the "taxpayer" understood what the "E" stands for...

I like cheetos.

At any rate, encouraging people to not work could help unemployment. I mean if that guy who choose not to work in order to maximize his EIC could have worked more but didn't, it means someone else will have to do that work instead. Perhaps Obama expanded EIC as a way to reduce unemployment?

(My real opinion is that EIC and ACTC need to die horrible deaths. Not only because they reward "bad" (irresponsible child bearing) behavior but also because they are so open to fraud. The scenario in the OP might as well have had the taxpayer with no kids, but with 3 "borrowed" social security numbers from family to claim as nephews/nieces and lie about where they live, because that's probably closer to EIC reality.)

[thomtax]

Sometimes I want to follow some of my suspect clients around to see what they are doing and turn them in!!!!

Venting over.. Waiting for them to come this year with the tighter EIC due dillegence... Great!

I hate to throw cold water on your vent, but I don't think the IRS cares. If you turned them in they would not want to take time to do anything about it. :-(

LT

[jimmcg]

Client, married, two kids. Rents. W-2 for $15,000. Doesn't work half the time.

Next client, married, two kids. Rents. W-2 for $37,000. Works every chance he gets.

Is it just me, or is the second guy working for nothing considering the amount of taxes and refundable credits involved??

Redistribution of income is a wonderful thing. Don't you feel better now?