I have read yet another article about taxes that had tons of comments complaining about the Earned Income Tax Credit (EITC) and how it isn’t fair. The actual article was about how you should figure your taxes so that you do not get a huge refund.
It never ceases to amaze me that people attack programs without bothering to look up the facts. Here are a couple myths about Earned Income Tax Credit:
MYTH #1 – EITC recipients are on Welfare
The two are unrelated. However, if you do not work then you cannot claim EITC. You must have wages that are earned (you must work for somebody who pays you or you must work in a business you own that earns a profit. Welfare wages are not “earned” and will not qualify somebody for the Earned Income Tax Credit.
So tell me how a person that has no income gets a tax refund of $8000 or more, So his (Jeff Schnepper’s) calculations are dead wrong. The average working class gets nothing while the wealthy and the dead beats get paid to do nothing with mine and your money. -Tom
Tom is quite simply, mistaken. The EITC does not give money to people without income. Furthermore, the average EITC is $2,216 (it ranges from $2 to $5657) so his claim of $8000 or more is also out of the question.
MYTH #2 – EITC recipients do not pay taxes
Everybody who earns an income pays taxes. Even if you only earn $10,000 a year, you will have to pay $1530 towards Social Security and Medicare taxes. If you work for somebody then they will pay half of that and if you are self employed then you will pay the full amount.
But those who get the earned income credit and typically pay NOTHING in taxes will still get that big fat refund from the government at my expense Even though I pay more than $12,000 in mortgage interest alone each year and the fat cats are trying to take that from me as a deduction, but those who get the EITC are probably on welfare, and such. – Huebster
The highest EITC you can get is $5657 and that is reserved for people with three or more children filing joint and earning $12600-$21450 or filing single with three or more children and earning $12,600-16,450. That group might come out ahead since their payroll taxes would range from $2003-$3282. However, that still is not taking sales, property, state, and other federal taxes into account.
I would like to also add that the home mortgage deduction still exists and probably gets him a better deal that the EITC does for these low earned income folks (who, more than likely, would not claim a mortgage deduction). A $12,000 deduction for somebody making $50,000 a year is worth $3000. That same deduction for somebody making $100,000 a year is worth $3527, and somebody making $200,000 a year would pay $3960 less. That is higher than the average earned income tax credit ($2216).
We have a crazy tax code; one where everybody feels “entitled” for one reason or another. You may feel entitled because you own a home, give to charity, care for a child, make a lot of money, live below the poverty line, etc. When I see emotionally charged comments such as these, I try to remember that I am blessed. Personally, I would rather be in the group that is “entitled” to lower taxes because I own a home and give to charity than the group that is “entitled” to lower taxes due to being poverty-stricken, even if they do sometimes come out a little “ahead”.
In 2009 the EITC lifted 6.6 million people out of poverty, 3.3 million of those people were children.
- Kids and Taxes: Five Things You Need to Remember This Tax Season (turbotax.intuit.com)
- Common tax breaks for families, individuals (seattletimes.nwsource.com)
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