Tax refund system

[firsttimer]

I know a single mother who works 20 hours a week
in a spa who and claims she gets back around $11,000 in a tax refund check.

In her job she said she earns gross around $13,000 a year


She told me for the last 4 years she has received on average every year over $10,800 in a tax refund.

I tend to believe her since every year around February she takes a trip to Disney land
with her kids.

How does this work?

[southerncrone]

1. Depends on how many kids she has.

The earned income tax credit is most likely how she does this. She could actually get back MORE than she made using this credit. It is one of the only credits that allows more to be refunded than the person earned.


http://www.irs.gov/Individuals/EITC-Home-Page--It%E2%80%99s-easier-than-ever-to-find-out-if-you-qualify-for-EITC

[firsttimer]

3. My sister is a single mother of 2

and she gets back around $3,100 , that's what she told me, I never asked my sister what her gross was.

The young mother I'm talking about has 4 children.

I'm wondering now if my sister should go to an accountant instead of doing her own taxes.

[Travis_0004]

2. I'm sure its possible

The head of household deduction is pretty large, Earned income credit would be good sized. Those two alone would net her 0 tax liability, and a small refund. Plus, I'm sure her employeer is withholding some taxes, so she will get all of the withheld taxes back. Those two credits along might get a 5k refund (assuming one kid, and you said she has at least two), and there are plenty of more to be had.

I know tax refunds are great, but one thing she should look into is changing her withholding to have her employer withhold 0 in taxes. Maybe she could take home an extra 250 a month, which I'm sure would be a big help, and then she would still get around 7k in refunds.

(Ideally she would want 1k extra a month, but your employer can not withhold negative taxes, they can only withhold nothing.

[cynatnite]

8. My daugher arranged to have an extra $20 a week taken out of her check for taxes...

It'll give her quite a bit back when she files next tax year. She wants to get another car with her next refund and decided some planning ahead was in order.

She can make her bills, but the lump sum of money that she gets with a refund helps substantially in other areas.

[Packerowner740]

4. My SIL is a high school principle making close to 100 grand annual

She has one daughter, never married the father of her child. He is a HS football coach and they live together. Because they didn't marry she claims head of household and gets at least $5000 each year on her return. She knows it's a scam but she doesn't care.

[southerncrone]

5. Good role model...

if needed:

[cynatnite]

7. If that's what she claims on her refund she is not eligible for EIC...

She may be getting that back from itemizing her deductions.

[cynatnite]

6. It's the one time a year that some people are able to do anything of substance...

Both my daughters bought cars with their refunds. We've paid large outstanding bills, bought computers, financed vacations and so on.

The earned income credit makes it possible depending on income and dependents.

I don't have a problem with this at all.