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Subject Author Date
Filing Tax Return...Please help! Someone! tttvot 03-01-2007
Posted by tttvot on March 1, 2007, 8:49 pm
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 Is it possible to have the IRS "refund" us about $2700 in
Tax money when we file our 2006 tax? TOTAL income $11000
from Husband and wife with 2 kids (1 seven years old and 1
one year old).

The $11000 is from my "independent contractor" job in which
I HAVE NOT PAY A PENNY TO THE IRS IN INCOME TAX THRU-OUT
2006. We paid the CPA $200 to file this TAX return. Was
this a rip-off from the CPA? CPA verbally gauranteed the
"REFUND" and stated that he would refund us the $200 fee if
the IRS does not pay.

We will be ultimately responsible for any ERROR on our tax
return and NOT the CPA!

My thinking...How can we get tax money "BACK" when we HAVE
NOT pay any taxes at all? The IRS is an institution that
"COLLECT" taxes and IS NOT an institution that give or
provide "MONEY" to people with LOW, very LOW
income...perhaps below poverty! Is this true?

Any help from anyone is appreciated...

Thanks...

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<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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Posted by Taxmanhog on March 3, 2007, 4:48 am
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> Is it possible to have the IRS "refund" us about $2700 in
> Tax money when we file our 2006 tax? TOTAL income $11000
> from Husband and wife with 2 kids (1 seven years old and 1
> one year old).
>
> The $11000 is from my "independent contractor" job in which
> I HAVE NOT PAY A PENNY TO THE IRS IN INCOME TAX THRU-OUT
> 2006. We paid the CPA $200 to file this TAX return. Was
> this a rip-off from the CPA? CPA verbally gauranteed the
> "REFUND" and stated that he would refund us the $200 fee if
> the IRS does not pay.
>
> We will be ultimately responsible for any ERROR on our tax
> return and NOT the CPA!
>
> My thinking...How can we get tax money "BACK" when we HAVE
> NOT pay any taxes at all? The IRS is an institution that
> "COLLECT" taxes and IS NOT an institution that give or
> provide "MONEY" to people with LOW, very LOW
> income...perhaps below poverty! Is this true?

Sure is...
Considering the factors you mention,
Your family will benefit from the EIC credit.

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Phil Marti on March 3, 2007, 4:48 am
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> Is it possible to have the IRS "refund" us about $2700 in
> Tax money when we file our 2006 tax? TOTAL income $11000
> from Husband and wife with 2 kids (1 seven years old and 1
> one year old).

Yes, it's not only possible, it's probable. You clearly
qualify for the Earned Income Tax Credit and may also
qualify for the Additional Child Tax Credit. Both of these
are "refundable," meaning that even if you didn't pay a
penny through withholding or estimated tax payments you'll
get a check from the government.

Since your income was from self-employment, that should be
reported on Schedule C, with the bottom line of Schedule C
on line 12 of the 1040. Your self-employment tax is
calculated on Schedule SE, with the amount of tax from that
schedule on line 58 of the 1040 and half that amount on line
27 of the 1040.

By the time you get to line 44 of the 1040, income tax will
be zero. Your total tax is totally self-employment tax,
meaning that lines 58 and 63 will be equal.

Moving on to payments, line 66a will show your earned income
tax credit, line 68 will show any additional child tax
credit you're entitled to (if there's a number there, make
sure that Form 8812 is included), and line 71 should show
$60. Total the "payments," subtract the self-employment
tax, and you'll have the amount of the check you'll get.

The Earned Income Credit and Additional Child Tax Credit are
income support programs directed toward low-income working
people, but administered through the tax system by the IRS.
It does seem strange, but that's what Congress decided to
do, and the Presidents at the time agreed to it.

--
Phil Marti
Clarksburg, MD

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Rich Carreiro on March 3, 2007, 4:48 am
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tttvot@yahoo.com writes:

> Is it possible to have the IRS "refund" us about $2700 in
> Tax money when we file our 2006 tax? TOTAL income $11000
> from Husband and wife with 2 kids (1 seven years old and 1
> one year old).

Yes, it is quite possible. I just ran the numbers
and see you getting around a $2500 refund.

With $11000 is total income, you will owe no
income tax, because your standard deduction
and personal exemptions will wipe out the entire
$11000.

You will have $1554 in self-employement tax. However,
you are eligible for a $4090 earned income tax credit.
This is a refundable credit -- you can get it even if
you didn't pay any taxes.

Subtracting the $1554 SE tax from the $4090 EITC leaves
you with a $2536 refund.

--
Rich Carreiro rlcarr@animato.arlington.ma.us

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by TxSrv on March 3, 2007, 4:48 am
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tttvot@yahoo.com wrote:

> Is it possible to have the IRS "refund" us about $2700 in
> Tax money when we file our 2006 tax? TOTAL income $11000
> from Husband and wife with 2 kids (1 seven years old and 1
> one year old).
>
> The $11000 is from my "independent contractor" job in which
> I HAVE NOT PAY A PENNY TO THE IRS IN INCOME TAX THRU-OUT
> 2006. We paid the CPA $200 to file this TAX return. Was
> this a rip-off from the CPA?

Whoa there! Don't indict your tax preparer just yet. This
sounds like the net effect of the earned income tax credit,
with two kids. It peaks at around $11K. Little (likely -0-
income tax effect, net of self-employment tax, plus the EITC
effect). Tax pros don't make the law; they may only here
charge a fair $200 for the few schedules to get you your
refund.

Your tax preparer should have explained this to you in a few
minutes. Leastwise, if you return is accurate and it sounds
though it is, would you rather someone else greedily charge
you like $500 to crank out same 1040 schedules off computer
and brazenly claim "tax expertise" for the net $2200 to you?

Alternatively, rather all in a day's work, and it sounds as
though he/she had more integrity than that. And more likely
rather busy in any given filing season, though I personally
would taken the few minutes to explain to you....

Fred F.

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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