EIC Vent

[luke]

had a new client today (over road truck driver) with $190K on 1099 Misc, provided expenses and trip logs, with his wife's small W2 he is eligible for over $2K EIC!!!! (he has over $60K depr on his truck)!
What really FROSTED me was his wife showed up driving a brand new BMW SUV!!!!
I dont really think these are the people EIC was meant to "help"!!! Grrrrrr

[Traveling EA]

Truckers

A semi tractor is depreciated over 3 years. It won't be long until the tractor is fully depreciated and the trucker will be paying in a very large amount of SE Tax. The years they have depreciation are very good for them (tax wise) but when there is limited depreciation, most of them cannot come up with the money to pay their taxes.

[JohnH]

Whenever I have a client who receives a large depreciation deduction in the early years and the asset is financed over 5-7-etc years, I warn them about the "phantom income" they will be paying tax on in those later years. Once the depreciation deduction begins to trail off, the monthly payment is still the same. Problem is, the only deduction is for interest paid on the loan. There's no offsetting deduction for the principal payments, so that portion of the payment winds up in net profit even though cash went out the door.

There have been a few times (usually year 3 or 4), when I had to pull those notes out and remind the client that we talked about this back in the year you got that big depreciation deduction and the nice refund. (or in your client's case - that nice EIC freebie from the rest of us taxpayers.) He likely won't remember it, so you'd beter document it.

[thomtax]

There is another group that I have a problem with. This week I had one that the woman worked enough to get a little over $3000 for the year. I said obviously you did not live a year on this. The Q and A went like this:

Q- Did you get housing assistance?
A- Yes. We live in housing authority and only have to pay electricity.
Q- Do you get food stamps?
A- Yes
Q- Do you get state given child insurance?
A- Yes
Q- Do you get any other support?
A- Yes - I get pregnancy medicaid. (Of course, the additional child will get them more EIC.)

With this, the big able bodied husband can stay home, fish, hunt, etc. all year long. Plus, she spends very little part of the year working, even though having certifications in the medical care industry.

I just have a problem with this and the attitude that they owe it to me.

LT