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Discussion Starter #1
Tax returns. I just don't get it. We used to make a LOT less than we do now and we used to get a HUGE refund. Now we make more and we get less back. My best friend makes a whole lot more than we do and they don't get anything. I just don't understand how it works. How can my friend pay so much in and not get anything back, but we pay in some and get back quite a bit more than we pay. Maybe I'm jsut stupid, but it confuses me.
 

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You bumped up a tax bracket (or two. or more. I don't know). And if it was a jump over a certain bracket, you don't get the same child tax and earned income credits.
 

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The more you make the more you are required to pay. Its in brackets. Once I got a $1 an hour raise and ended up taking home less money because it bumped me up. That sucked.
 

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Also, how much you get back depends on the deductions you have set up for them to take out over the year. Some people would rather get a refund, some people would rather risk owing money, so they arrange their deductions accordingly.
 

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Discussion Starter #5
Ok, but I still don't understand how my sister can make maybe $8,000 a year, with very very little taken out and get a refund of almost $7,000.
 

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Earned income credit.<br><br>
The government gives you money that is based on income. It has nothing to do with how much you pay in. I have a friend that has paid no taxes this year. Her dh literally has nothing taken out for taxes. And, yet, their return is going to be $7500. It's just money the government is giving her.
 

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Discussion Starter #7
Ok, that makes sense. Thanks!
 

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Does your sister have children?<br>
She probably qualifies for the EIC and other things.<br>
If you make less with children you qualify for more $ back.<br>
I remember when I was in college I made very little with DS and I and I used to get HUGE refunds $5-6K. I NEVER paid that much in.<br>
Now I make much more and get a lot less back in taxes. I dont qualify for those refunds/credits anymore.
 

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Does she have children? Low income can trigger an Earned Income Tax Credit, or other credits that can actually pay you more back than you had withheld. If she had 2 children I could see her getting about that much.<br><br>
And that is why you are probably also getting back more than you pay...child tax credits are refunded to you if they are in excess of what you owe.<br><br>
ETA...I'm too slow, others beat me to it!
 

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Discussion Starter #10
Yep, she has two kids.
 

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As a side note, if you have to pay taxes or you get back more than a couple hundred in refunds, you should adjust your withholdings. Huge refunds from withholding mean that you've given the government an interest free loan for a year and even a savings account will net you a higher return.
 

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<div>Originally Posted by <strong>seren</strong> <a href="/community/forum/post/10324507"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">Yep, she has two kids.</div>
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EITC, Child tax credit and additional child tax credit. Plus, when you're low income you have little to no tax liability and generally everything you've paid in will come right back. At least that's how it's been for us.
 

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<div>Originally Posted by <strong>sapphire_chan</strong> <a href="/community/forum/post/10324552"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">As a side note, if you have to pay taxes or you get back more than a couple hundred in refunds, you should adjust your withholdings. Huge refunds from withholding mean that you've given the government an interest free loan for a year and even a savings account will net you a higher return.</div>
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unless a significant portion of your income is through bonus pay! About half of Dh's income is through incentive, bonus pay and it is taxed at a set rate having nothing to do with our withholdings. As a result, we get a huge return every year. It kind of stinks - I'd rather have the money through the year and add it to our Emergency Fund!
 

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<div>Originally Posted by <strong>aisling</strong> <a href="/community/forum/post/10325472"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">unless a significant portion of your income is through bonus pay! About half of Dh's income is through incentive, bonus pay and it is taxed at a set rate having nothing to do with our withholdings. As a result, we get a huge return every year. It kind of stinks - I'd rather have the money through the year and add it to our Emergency Fund!</div>
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Typically, bonuses are taxed if you receive that amount every pay period. So if you get a $50K bonus and get paid monthly, they are taxed as if you earn $50K/mo.
 

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<div>Originally Posted by <strong>DreamsInDigital</strong> <a href="/community/forum/post/10324578"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">EITC, Child tax credit and additional child tax credit. Plus, when you're low income you have little to no tax liability and generally everything you've paid in will come right back. At least that's how it's been for us.</div>
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How the heck do you get the child tax credit? I think I have gotten it ONCE in the past 7 years and I don't think I've made over $20k yr in that time. I file using HR Blocks online program and it NEVER gives it to me<img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/greensad.gif" style="border:0px solid;" title="greensad"> Gives me EITC but not the child tax credit and I have 2 kids!
 

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Personally Satori, I would never use H&R Block for my taxes... but that is just a personal thing on my part. Try another IRS approved filing program such as TaxSlayer. You can find a whole list on <a href="http://www.irs.gov" target="_blank">www.irs.gov</a>.<br><br>
Without knowing your personal situation, it's hard to say why you did not get it or if you are entitled to send in an amended return for those years. Do you live near a place that offers a VITA (volunteer income tax assistance) program? They have tax counseling and can help you for free if you make $40K or less a year.
 

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<div>Originally Posted by <strong>Satori</strong> <a href="/community/forum/post/10327951"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">How the heck do you get the child tax credit? I think I have gotten it ONCE in the past 7 years and I don't think I've made over $20k yr in that time. I file using HR Blocks online program and it NEVER gives it to me<img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/greensad.gif" style="border:0px solid;" title="greensad"> Gives me EITC but not the child tax credit and I have 2 kids!</div>
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The child tax credit is a reduction in your taxes owed. If you are making under $20K and getting the EITC there is a good chance you are not paying any *Federal Income Tax* (you are still paying payroll taxes, etc...).<br><br><div style="margin:20px;margin-top:5px;">
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<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">In general, you can't claim a child tax credit that is more than your income tax liability, but in some cases you may be able to claim the difference as a refund. Use Form 8812, Additional Child Tax Credit, to calculate your additional credit.</td>
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<a href="http://financialplan.about.com/cs/taxes/a/ChildTaxCredit.htm" target="_blank">http://financialplan.about.com/cs/ta...dTaxCredit.htm</a><br><br>
I would look into the form "just in case" but if you're getting back more than you paid in already, chances are good you won't get more. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/greensad.gif" style="border:0px solid;" title="greensad">
 

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<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
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<div>Originally Posted by <strong>Iris' Mom</strong> <a href="/community/forum/post/10327631"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">Typically, bonuses are taxed if you receive that amount every pay period. So if you get a $50K bonus and get paid monthly, they are taxed as if you earn $50K/mo.</div>
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ahhh, that makes sense. thanks!<br><br>
Like I said, its a bit frustrating, but if it had to be one way or the other, I'd rather get money back than owe every year. Might be faulty logic, but I'm okay with that. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/wink1.gif" style="border:0px solid;" title="wink1">
 

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Yep to the bonuses. My husband and I are in the 10% tax bracket when all is said and done, but he just got a bonus this month, and they took out 30% of it.<br><br>
I just changed DH's withholdings. We're getting between 5 and 6,000 back this year (not sure exactly as I'm waiting for something to come from our mutual funds), and I went to his paysite, and he has NO exemptions claimed.<br><br>
We're eligible for NINE, according to the IRS. So, I changed his exemptions to 7, just to have a *little* bit of a cushion. Especially w/a recession looming, I'd much rather have that 4-500/month in our savings account than in the gov't's pocket.
 

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<div>Originally Posted by <strong>TiredX2</strong> <a href="/community/forum/post/10329450"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">The child tax credit is a reduction in your taxes owed. If you are making under $20K and getting the EITC there is a good chance you are not paying any *Federal Income Tax* (you are still paying payroll taxes, etc...).<br><br></div>
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I bang my head every year at tax time, I'm not getting it because I didn't make $11,300 on a W-2. don't supposed there's a way to claim PELL grants and Stafford loans huh? <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"> I finally found a job that works for us (start next month!), here's to hoping to a decent tax return next year!<img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/orngbiggrin.gif" style="border:0px solid;" title="orange big grin">
 
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