ML/NJ
Yeah, the math doesn’t really make sense. If this is a legitimate story she’s having way too much withheld.....like $5400 too much,
Earned income Credit, that my tax payment pays for.
Earned income credit? Child care credit?
Minimum wage in SC equates to about $15,000 per year. She likely is a waitress and declares tips to boost her income. With three deductions and an earned income tax credit, she may have just used money from 'we the people' to cover her rent.
None the less it was a smart move and legal.
Minimum wage in SC equates to about $15,000 per year. She likely is a waitress and declares tips to boost her income. With three deductions and an earned income tax credit, she may have just used money from 'we the people' to cover her rent.
None the less it was a smart move and legal.
child tax credit and EIC.
I think a lot of low wage earners with kid(s) get such large “refund” checks. It’s due to “refundable” tax credits which can result in large refunds for “taxes” which were never actually withheld.
These refundable credits can be really abused...especially by illegal aliens with no SSNs and “imaginary” dependent children.
She might get an earned income tax credit. Regardless, if you have ever been really impoverished, it’s the outgo, not the income and possible to exist on very little. I proposed to my wife at a chinese restaurant - maybe the “Hungry Wok.” They had tablecloths - fancy.
Chances are that she filed as Head of Household and had little or no withholding. She probably claimed the Earned Income Tax and Additional Child Tax Credits, both of which are refundable tax credits. (The Earned Income Tax Credit was instituted by POTUS R Regan.)
This is all perfectly legal under current law and IRS code. If so, and unlike many, she used the credit appropriately, in the way the credit was meant to be used.
“Why would a minimum wage earning, single mom be over withheld by $5400?”
She wouldn’t. She gets extra money from EITC and single, head of household credits, etc. So, not only does she get back everything she paid in federal taxes, she gets a bonus, as well. If she made minimum wage she would have earned around $18,000 per year working full time. If she had $5,600 taken out in federal income taxes during that year she would be getting taxed at 30%. No way in hell did she claim 0 exemptions on her withholding.
She wasn't over-withheld nor was that a refund. She received your and my tax dollars via the EITC - Earned Income Tax Credit which is nothing more than wealth redistribution via the tax code.
Even that name's a misnomer .. she did nothing to EARN it!
Earned Income Tax Credit. Another form of welfare. They get back way more than they paid in.
At lead she did something useful with it. Most blow it.
Earned income and head of household.
Its the unearned income tax credit and kids that got her the refund. At least she didn’t waste it.
I prefer owing taxes and living ok.
Simple. EIC. Minimum wage workers (or more) with children all get in the 3 to 4 thousand dollar “gift”.
It’s not a refund if you don’t pay in but it is The earned income tax credit and other refundable tax credits. My guess is she did not pay anything.
That being said, of all of the welfare programs, the EITC is probably better than most because it at least requires work
She gets an earned income tax credit for her kids, she pays NO TAXES on her income then you and I the taxpayer give her EXTRA MONEY for having kids!!!
Earned Income Tax Credit and being overwitheld a couple grand might do it. That’s what I’m thinking.
Earned income tax credit. Earn 12000 with two kids, get 5-8K back as a thank you for working and not just sitting on welfare.
The incentive is so strong many women won’t marry the father of their children though he lives with her, to get that extra 5-10K per year in EITC and welfare benefits like SNAP and utility discounts.