Friday, January 27, 2012

Income Tax "Refund"...? More Like Bonus.

Let me start this post out by saying that if you are in the same situation, PLEASE post a comment below.  I am beginning to wonder if we are the only ones this is happening to...

Back in January of 2010 when Cole was 6 months old, I can remember preparing our income tax return and seeing that even though I had only worked half a year in 2009, we were due to get a big fat check for more than $6,000!  There is no way we paid more than about $1,500 in Federal witholding/Social Security/FICA that year, and yet the government was essentially cutting us a bonus check of $4,500 for the year.  Hmmm.  So we chalked it up to the fact that we had a baby that year and went about our business...spending money like it was our job ;-)

Here it is, January of 2012 and Vera is 6 months old.  We now have a service doing our taxes for us (GL Advisor - they take care of Jake's loan management and all that jazz and do free tax prep & filing), but I have done quite a few tax refund calculators and have determined that AGAIN we are in for a refund check of more than $7,000!  This time I KNOW we have only paid in about $1,200 for the year (as Jake worked half the year in 2011).  Yes, we did have an additional kid, but are we REALLY going to get a second "bonus" from the Federal government?!?!

Apparently our cash is stemming from the EIC - Earned Income Credit.  Here is more information on the subject (as it is much too boring for me to elaborate on at this moment in time)...

Earned Income Tax Credit (EITC or EIC)

Using their calculator I have determined that about $5,011 of that "refund" is through EIC, but that next year when Jake has worked a FULL year we will only qualify to receive $650 in EIC cash.  Sadness.  But not really...because after all...WHERE is this money coming from?

(Thanks mom & dad...Jake's mom & dad...and all the other people out there paying a 49% tax rate...your contribution has been noted and will be used to purchase a mini-van for the Eichenbergers...either an Odyssey or a Routan...you'll understand if we don't send a thank-you as there are so many of you it would be impractical.)



4 comments:

Abby said...

Must be nice :-) Phillip makes too much for the EIC which makes me sad, but having 4 kids does mean we don't pay too much in taxes (and we always get a refund). Just wait until Jake is making his REAL paycheck. That's when you'll be paying back into the system!! AND... now that you don't own a house you won't get nearly as much back this year. boo!

keisha said...

Yep. We're in the same position. Jonathan worked all year at a wage our family can live on, our baby is over a year old and we are still receiving an obscene amount of money back. (Last year with a new baby it was 5 figures!) This year isn't as high but it's completely funding our emergency fund and paying off 50% of our debt - AFTER tithing.

I do appreciate the boost. But JUST MAYBE our country wouldn't be in such a ridiculous mess if the government would learn the difference between a "tax refund" and "we're going to give you thousands of dollars just because." If they did, they would be sending us 6 TIMES less money than they actually are.

Amanda E. said...

Abby - the sad part is that we DO still own a home in Indy (ughhhhh). We never counted the interest payments though since it is a private loan. And that paired with our uber crappy charitable giving means we just take the standard deduction each year for now.

Keisha - isn't it crazy?! Glad we aren't alone ;-) And way to go funding that emergency fund!!!!

keisha said...

Good plan, huh?! If we'd just done that LAST year we wouldn't have ended up with the debt from a crappy end of the year in sales.