Oh Baby! Posted January 20, 2009 Report Share Posted January 20, 2009 Just received an e-mail from a client of mine who says he needs to know the status of his refund (EIC). You see, he's off to Europe with his wife later on this week and needs the money to pay for the trip. Was there ever a government program that was more abused???? every year that I prepare an EIC return and I see the EIC amounts increase, I cringe! It's ME, who's working my butt off to pay for these losers to go buy themselves a new flat screen tv from Walmart! Quote Link to comment Share on other sites More sharing options...
jainen Posted January 20, 2009 Report Share Posted January 20, 2009 >>Was there ever a government program that was more abused??<< Why, yes, as a matter of fact I can think of quite a few, starting with defense contractors to our national shame. Frankly I'm not too worried that folks trying to raise kids on less than 30K might be getting more than they deserve. Even for the ones who are cheating, $5000 isn't exactly the crime of the century. Quote Link to comment Share on other sites More sharing options...
Virtual Managed Solutions Posted January 20, 2009 Report Share Posted January 20, 2009 $5,000 sure does make me think about having a kid. It's sad to see all the people that I grew up with, most of whom even younger than me, having 2, 3 kids already and abusing the system having everyone else pay their way in this life. Lieing about money earned to get welfare, food stamps then going to places like HRB with their W2's the day they come in the mail, getting instant RAL's with EIC and bringing home $6000+ when I work for a living and lucky to get $1200 back in taxes. Saddest part of all, is that they do go out and buy those flat screens from WalMart and the kids who need the money most, never see anything from it. They don't even benefit from the EIC, which IMO was set up to benefit them most. Actually, now that I reread this statement it makes me glad I am the way I am and that I only know these people as my past. Quote Link to comment Share on other sites More sharing options...
Virtual Managed Solutions Posted January 20, 2009 Report Share Posted January 20, 2009 Well, at least they get to watch Sponge Bob in HDTV. I never had those things when I was kid. Life is so unfair! Quote Link to comment Share on other sites More sharing options...
David1980 Posted January 20, 2009 Report Share Posted January 20, 2009 I'm happy my customers are getting money, but the economics of it does disgust me. It's not just EIC. It reminds me of this guy in my highschool graduating class. Star athlete, good grades, high SATs, student leadership, community service. He was the perfect student. Got something like $120k/year in scholarships and was only attending a $20k/year school so $100k of that went nowhere (I guess they must have had "runner up" people to get it.) Low income parents with kids are the same way. I speak of experience, I grew up in a welfare family. You get section 8 housing, EIC, different welfare programs at the state level, food stamps, food bank, 7 food baskets at christmas (too much turkey!) Basically everyone who creates an assistance program targets you so you get a ton of assistance. Whereas the family making $10,000 more than you lives a lower standard of living because nobody targets them for handouts. Or the single person without kids. What's the result of this? Well, on a long enough timeline rewarding people for reproducing increases the odds of low income people reproducing. Children born to poor families are likely to raise poor families of their own. It's an absolute disaster as far as economic planning. Quote Link to comment Share on other sites More sharing options...
jainen Posted January 20, 2009 Report Share Posted January 20, 2009 >>ewarding people for reproducing increases the odds of low income people reproducing<< Ah, the old prejudice that poor people have children so they can get more welfare. Don't hear that one much any more, but it was always one of my favorites.. Virtual Managed says that EIC was set up for the benefit of kids, but I wonder what he bases that opinion on? In my observation, the principal effect (and presumably the purpose for continuing) of an annual cash bonus is to increase consumer spending on big ticket items they couldn't otherwise afford. Yeah, that means something from Wal-Mart. 'Cause it's so doggone much money. Quote Link to comment Share on other sites More sharing options...
David1980 Posted January 20, 2009 Report Share Posted January 20, 2009 >>ewarding people for reproducing increases the odds of low income people reproducing<< Ah, the old prejudice that poor people have children so they can get more welfare. Don't hear that one much any more, but it was always one of my favorites.. It certainly gives a strong disincentive to earning more money & kids born into poor families are more likely to have poor families of their own. I don't think people truly have kids for the sake of getting money, but at the same time they aren't working their way out of that situation like they might if they didn't have kids & all the benefits that provides. Virtual Managed says that EIC was set up for the benefit of kids, but I wonder what he bases that opinion on? The fact that having kids greatly increases EIC could be one basis for such an opinion. What's it top out for with no kids, 600 or 700? In my observation, the principal effect (and presumably the purpose for continuing) of an annual cash bonus is to increase consumer spending on big ticket items they couldn't otherwise afford. Yeah, that means something from Wal-Mart. 'Cause it's so doggone much money. Give it to everyone if that's the purpose. Quote Link to comment Share on other sites More sharing options...
jainen Posted January 20, 2009 Report Share Posted January 20, 2009 >>Give it to everyone if that's the purpose<< Okay, that was last year's stimulus. I really don't understand the criticism of EIC recipients, especially from tax professionals. If you don't enjoy working with the tax code, why are you even in this business? Criticize Congress if you disagree with the widespread policy of using the tax code for economic incentives, but there is NOTHING wrong with individuals filing for benefits they are legally entitled to. IRC Section 32 has no greater moral significance than Section 179 or any other credit or deduction that Congress has authorized. Quote Link to comment Share on other sites More sharing options...
David1980 Posted January 20, 2009 Report Share Posted January 20, 2009 One doesn't have to agree with all of the tax code (and I doubt you'll find anyone who does!) to enjoy this line of work. And someone who qualifies for EIC would be a fool to turn it down. I do the best I can for my clients. I do not always agree with the tax law but I follow it. As is often said, taxes is not about fairness. Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted January 20, 2009 Report Share Posted January 20, 2009 One doesn't have to agree with all of the tax code (and I doubt you'll find anyone who does!) to enjoy this line of work. And someone who qualifies for EIC would be a fool to turn it down. I do the best I can for my clients. I do not always agree with the tax law but I follow it. As is often said, taxes is not about fairness. Yes...I am disgusted by people who "take advantage" of EIC and assistance programs.....but not near as disgusted as I am with multi-millionares whos greed legally "steals" from all of us, then turns around and gets bailout money for their company...then turn around again and get a big bonus....makes a $5,000 refund with EIC seem not so bad. ...I say line up 99% of CEOs and corp execs and feed them peanut butter crackers Quote Link to comment Share on other sites More sharing options...
Virtual Managed Solutions Posted January 20, 2009 Report Share Posted January 20, 2009 I know of families around my area who their kids don't have much. They live in filth, parents are never home, food cabinets are always at a bare minimum and I'd imagine they've never gone to a good restaurant unless you count McDonald's, let alone ever gone on a vacation with their family. I believe EIC is there to do all these such things. It gives qualifying parents the ability to do these things that they normally wouldn't be able to provide. Instead, their greed takes over and they spend it on themselves. Buy brand new clothes, their children are wearing raggedy hand me downs, when they don't even have a proper coat for the weather that we are now experiencing. They can never play outside, because they don't have boots rugged enough for the extreme condition, but yet their mom throws parties every night with all her friends who are only her friends, because she has that extra $5,000 from EIC. After a week that's almost gone and so are the "friends," now she's left with kids who were no better off then when the EIC was received. I understand that's the difference between good parents who spend the EIC wisely and use it to benefit their families. But, everyone is different, and in my area that is what's happening to this extra money. It doesn't go to any good. Can't really say it's being abused, because they do qualify and the tax code is there, but it definitely going to waste and it isn't hurting anyone but the children. Quote Link to comment Share on other sites More sharing options...
zeke Posted January 20, 2009 Report Share Posted January 20, 2009 >> Even for the ones who are cheating, $5000 isn't exactly the crime of the century.<< So theft is relative while a lie is a lie? (S-Corp late election) z :scratch_head: Quote Link to comment Share on other sites More sharing options...
Catherine Posted January 20, 2009 Report Share Posted January 20, 2009 >> Even for the ones who are cheating, $5000 isn't exactly the crime of the century.<< So theft is relative while a lie is a lie? (S-Corp late election) z Theft is theft, and a lie is a lie -- but doesn't it make sense to go after the bigger thieves first? Bang for your buck, and all that? Does all the EIC fraud add up to what Madoff stole? Just a thought. Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted January 20, 2009 Report Share Posted January 20, 2009 Theft is theft, and a lie is a lie -- but doesn't it make sense to go after the bigger thieves first? Bang for your buck, and all that? Does all the EIC fraud add up to what Madoff stole? Just a thought. Theft to feed your family is more forgiveable in my mind then theft to further a posh lifestyle Quote Link to comment Share on other sites More sharing options...
jainen Posted January 20, 2009 Report Share Posted January 20, 2009 >>theft is relative while a lie is a lie?<< [the reference is to my facetious posts in MAS's thread, "Valid Reason."] Yes, I am taking contrarian positions in both these discussions. I hope to point out how silly I think selective morality is. Why should we tolerate a question about how corporate owners can invent some excuse to get around a tax limitation, yet criticize working families for using legitimate incentives? Quote Link to comment Share on other sites More sharing options...
zeke Posted January 20, 2009 Report Share Posted January 20, 2009 >> yet criticize working families for using legitimate incentives?<< Few could disagree with your carefully parsed question. But, I thought my comment regarded those inclined to theft - not "legitimate incentives". I do, however, acknowledge that I must be the one ot of step. My lone opinion being outvoted by Jainen, Janitor Bob & Catherine. z Quote Link to comment Share on other sites More sharing options...
JohnH Posted January 20, 2009 Report Share Posted January 20, 2009 I don't have any problems with the EIC or most other similar forms of welfare for those who are truly in need of public assistance. I just think it should be administered by the department of social services rather than by the IRS via tax preparers and RAL providers.. Quote Link to comment Share on other sites More sharing options...
jainen Posted January 20, 2009 Report Share Posted January 20, 2009 >>it should be administered by the department of social services<< EIC is for people who are working, not on welfare. In the form of advanced EIC, it is designed to help people get OFF welfare, and in fact welfare treats EIC as additional income that can reduce eligibility. Although it has a reputation for petty fraud, EIC continues to enjoy strong support in Congress because studies continue to show that it functions as planned and provides a valuable benefit to low income families and their communities. It is generally based on W-2s and Social Security numbers, with enhanced requirements for professional "due diligence." In my opinion there is a vastly greater opportunity for, and incidence of, tax fraud from business owners reporting incorrect income and expense amounts (not to mention changing their tax positions retroactively with the energetic assistance of tax professionals). Quote Link to comment Share on other sites More sharing options...
Oh Baby! Posted January 20, 2009 Author Report Share Posted January 20, 2009 Since I am the one who started this thread and I see that it has moved off course a little bit, let me steer this back in the direction I was hoping. My problem with the EIC (as well as many other government programs for the poor) is that it clearly encourages people to either 1) cheat on their taxes or 2) keeps them poor. The money received from the EIC is rarely used to actually better the family's life. rather, the funds are used frivolously. Want to better a poor family's life? instead of giving them $5,000 a year from the EIC, give them a $5,000 voucher that they can use for college tuition at any college they can get accepted into. In all my years of doing tax work, I have RARELY seen anyone get off of government programs. Whether it be the EIC, food stamps, medicare, subsidized housing etc. So to me, it is clear, that these programs, which in theory, are designed to help poor folks get a better life, do just the opposite. Quote Link to comment Share on other sites More sharing options...
JohnH Posted January 20, 2009 Report Share Posted January 20, 2009 >>it should be administered by the department of social services<< EIC is for people who are working, not on welfare. In the form of advanced EIC, it is designed to help people get OFF welfare, and in fact welfare treats EIC as additional income that can reduce eligibility. Although it has a reputation for petty fraud, EIC continues to enjoy strong support in Congress because studies continue to show that it functions as planned and provides a valuable benefit to low income families and their communities. It is generally based on W-2s and Social Security numbers, with enhanced requirements for professional "due diligence." In my opinion there is a vastly greater opportunity for, and incidence of, tax fraud from business owners reporting incorrect income and expense amounts (not to mention changing their tax positions retroactively with the energetic assistance of tax professionals). There are plenty of working people who are deserving of welfare - the "working poor" we hear so much about. A comprehensive approach to welfare which would include elements of the EIC would be much more productive in moving people off the welfare rolls and less subject to cheating at all levels. EIC continues to enjoy strong support in Congress simply because it buys votes. Other areas of tax fraud are irrelevant to this discussion. We could always start a separate thread for each and every one of them, but throwing that matter in to th is discussion is nothing but a bad attempt at diversion. Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted January 20, 2009 Report Share Posted January 20, 2009 As long as we are on this subject, I am curious about something that some of you may have more experience with. To my mind, the advance EIC would be more beneficial by providing the working poor with some extra money for food and other necessities throughout the year. However, I have never seen advanced EIC on any of my clients' returns/W-2's. Now I admit that for the most part my clientele is not in the EIC income range, but I was wondering if the rest of you see Advance EIC used much. Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted January 20, 2009 Report Share Posted January 20, 2009 I find it hard to convince my poor clients that getting a little extra every week helps pay the bills better than a big refund once a year but they are conditioned to being very happy with that big check. Sad. taxbilly Quote Link to comment Share on other sites More sharing options...
mcb39 Posted January 20, 2009 Report Share Posted January 20, 2009 I find it hard to convince my poor clients that getting a little extra every week helps pay the bills better than a big refund once a year but they are conditioned to being very happy with that big check. Sad. taxbilly Unfortunately, that is true. I have only seen advanced EIC once in many years. However, I do not have a problem with clients receiving EIC if they are trying diligently to support their families by working as much as they can. Many of them are the victims of circumstances who are fine, deserving people and EIC is an incentive for them to work. When you guess that some are manipulating the system by working the requisite hours to receive the maximum credit, of course it is time to cringe. However, I don't see much of that. And I also have a few clients without children who qualify for an EIC stipend. Quote Link to comment Share on other sites More sharing options...
David1980 Posted January 20, 2009 Report Share Posted January 20, 2009 As long as we are on this subject, I am curious about something that some of you may have more experience with. To my mind, the advance EIC would be more beneficial by providing the working poor with some extra money for food and other necessities throughout the year. However, I have never seen advanced EIC on any of my clients' returns/W-2's. Now I admit that for the most part my clientele is not in the EIC income range, but I was wondering if the rest of you see Advance EIC used much. I've seen it once. And totally missed it (initially). Was on auto-pilot and my mind just skipped that box. Caught it on the second go around, but it was cool since return was a freebie for a friend of a friend and she understood. I like the idea of advance EIC. Then again if I could do it without paying interest or penalties I would wait until the last moment I possibly could to pay any taxes. I always tell people including customers that *my* goal is to owe $1000 each year in my "You need to adjust your withholding so you don't get another $12k refund" speech. Sometimes I convince them to adjust withholding to a refund of "only" a few thousand. I guess it's easier to save money if you're forced to through withholding, even if you're giving up earning interest on it. Quote Link to comment Share on other sites More sharing options...
jainen Posted January 20, 2009 Report Share Posted January 20, 2009 >>I have RARELY seen anyone get off of government programs<< You have a short memory. In the previous Democratic administration, welfare reform (with bi-partisan support from a Republican Congress) moved about 2/3 of welfare families into productive jobs which supported a great cycle of prosperity. Since then tax incentives (including reduced enforcement and other opportunities for fraud) have been given to business owners instead of workers, and the economy has tanked. (For JohnH, this is the direct connection between the two issues. The call for comparison was made in the original post of this thread.) Quote Link to comment Share on other sites More sharing options...
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