Tag Archives: Tax refund

Most People Got Bigger Tax Refunds This Year Than Last Year

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Yesterday Hot Air posted an article about this year’s tax refunds. The article was in response to a Washington Post article claiming that people were getting lower tax refunds this year than last year.

The article at Hot Air pointed out a number of things that might result in getting a smaller tax refund:

But since we have to play this game, let’s figure out why your refund is smaller. Did you get a raise or a significant bonus last year? Did you perhaps start a new job that pays more? Were there any other major changes in your financial situation? Tax filing company Intuit has a list of possible explanations you could look for. They include things such as your filing status changing, the selling of assets or the possibility that you were hit with a penalty.

There will be a small number of people who lost out on part of their SALT (state and local tax) deductions, but that should really only have a significant impact on people in high-tax states like New York who are earning well into six figures. As for everyone else, if your income went up, did you adjust your withholdings accordingly? If not, perhaps you need to have a chat with an accountant.

The article also reminds us that a tax refund is a refund of the money that you gave to the government during the year. You allowed them to have that money interest free until you filed your tax return and they were obligated to give the money back to you. Ideally, your tax refund should be small–that means that you correctly calculated the amount of money you actually owed the government. The question is not how big your tax refund is–the question is how much money you actually paid in taxes. The size of your tax refund is simply a reflection of how much money the government took from you during the year.

One Reason Washington Insiders Fear Ted Cruz

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Senator Ted Cruz is not a Washington insider. Despite the fact that his career path has taken him to Washington, he is not part of the ‘in-crowd.’ He has shown numerous times that he has basic principles and that he is willing to take a stand on those principles whether anyone joins him or not. This sort of thinking is dangerous to the Washington establishment–of either party. That is one reason the attacks on him will increase as the primary elections continue.

Currently the Internal Revenue Service Tax Code is a tribute to the effectiveness of lobbyists. The tax code is used to encourage certain behavior and discourage other behavior. There are times when the tax code has been used to encourage marriage and families and times when it has been used to discourage marriage. Certain business with strong lobbyists have received tax breaks in the past. The tax code has been used to subsidize certain industries and behaviors. Crony capitalism has been a major force behind changes and writing of the tax code. It is time for that to end, and Ted Cruz has an interesting suggestion as to how to end it.

The following is taken from Ted Cruz’s webpage:

FlatTaxPlanWouldn’t it be nice to be able to pay your taxes on this simple form?

The website further reports:

PERSONAL INCOME TAX – SINGLE RATE: 10%

The Simple Flat Tax creates a simple, single-rate flat tax for individuals. The existing seven different rates of individual income tax will become one low rate: 10%.

  • A family of four will pay no taxes on their first $36,000 of income.
  • The plan exempts a large amount of initial income for low- and middle-income taxpayers, with a $10,000 standard deduction and $4,000 personal exemption. It also keeps the Child Tax Credit and expands and modernizes the Earned Income Tax Credit with greater anti-fraud and pro-marriage reforms.
  • The plan keeps the charitable giving deduction and features a home mortgage interest deduction, capped at principal value of $500,000.

BUSINESS FLAT TAX – SINGLE RATE: 16%

The corporate income tax along with the payroll tax are abolished, replaced by a 16% Business Flat Tax.

  • The current corporate tax code is riddled with years of accumulated loopholes and special favors, burdening U.S. businesses with the highest top tax rate among the advanced nations. This convoluted and anti-competitive structure will be replaced with a simple 16% tax on net business sales (gross sales minus expenses and capital expenditures).
  • The current payroll tax discourages work and job creation. The vast majority of Americans pay more in payroll tax than in income tax. The Simple Flat Tax will eliminate the payroll tax, boosting jobs and wages for working Americans, while guaranteeing funding for Social Security and Medicare.

UNIVERSAL SAVINGS ACCOUNTS (USA)

The Simple Flat Tax creates Universal Savings Accounts (USA) allowing savings of up to $25,000 per year in tax-deferred dollars.

Savers can withdraw the funds at any time for any reason – whether it be for college tuition, a down payment on a home, or their son or daughter’s wedding. This savings feature harmonizes with the tax elements of the Cruz Simple Flat Tax to move toward encouraging savings and investment – a recipe for economic growth and jobs.

There are other tax reform plans out there, but this plan looks possible and interesting. The plan also eliminates the death tax, the overseas profits tax, the Alternative Minimum Tax, and the ObamaCare taxes.

I would just like to note that there is some serious double taxation in our current tax code–the death tax taxes money that taxes were paid on during the life of the person who died. Taxes paid on Social Security income are being paid on money that was already taxed when it was earned. The government needs to become considerable less greedy and allow Americans to keep more of the  money they earn.

 

 

Tax Refund, Anyone?

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Today’s Washington Free Beacon posted a story stating that the Internal Revenue Service issued $46 million in erroneous tax refunds in 2013 returns.

The article reports:

The Treasury Inspector General for Tax Administration (TIGTA) released an audit Monday faulting the IRS for approving thousands of potentially fraudulent tax refunds in 2013.

“TIGTA identified that because of a programming error, over $27 million of refunds were erroneously issued for 13,043 Tax Year 2013 tax returns,” the audit said. “The programming error is overriding the IRS’s two-week processing delay on some refund tax returns that are identified by the IRS as potentially fraudulent.”

The audit said the returns were flagged for claiming a “questionable tax credit” but were then automatically issued before the IRS could complete its verification process.

In addition, the audit identified 3,910 “potentially fraudulent” tax returns that were issued due to ineffective monitoring, totaling $19 million.

“The IRS did not ensure that tax examiners timely completed their verification work,” the audit said. “Name mismatches in IRS systems prevented refund holds from posting to tax accounts. Refund holds were either not set correctly or not functioning as intended.”

The article states that the audit recommended that the IRS improve its screening and verification process. No kidding.

Let’s Give Away More Of Taxpayers’ Money

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Sometimes you wonder if Congress were spending their own money, would they be a little more careful with it?

On Saturday, The DC Clothesline reported that the Democrats on the Senate Budget Committee voted unanimously to allow illegal immigrants to receive Earned Income Tax Credit (EITC) and child credit. Note the words “illegal immigrants.”

The article reports:

Sen. Jeff Sessions proposed an amendment, which would prevent illegal aliens from receiving the Earned Income Tax Credit (EITC)  and child credit.

…In the last year with complete records, 2010, the amount of fraudulent payments hit 4.2 billion dollars and all tax credits combined cost about 7.6 billion last year.

Democrats who voted against the amendment were:  Bernie Sanders, Debbie Stabenow,  Sens. Patty Murray, Ron Wyden, Sheldon Whitehouse, Jeff Merkley, Mark Warner, Tammy Baldwin, Tim Kaine and Angus King.

…Debbie Stabenow, who is one of many democratic women with IQs in single digits said she doesn’t believe illegal aliens are collecting federal benefits even though the idea came from the Treasury Inspector General who stated unequivocally that illegals are collecting benefits was right in front of her.

The amendment failed with unanimous support of the republicans on the committee.

Why don’t we either return illegal aliens to their home countries or take steps to prevent them from taking money out of the pockets of Americans. I don’t mind giving someone a hand-up when needed, but we have reached the point where illegal aliens are committing fraud to take money from Americans. That has got to stop.

Adding To The Confusion Of ObamaCare

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CNN posted an article today about how the subsidies paid to ObamaCare subscribers are going to impact their taxes. No one told them this was going to be taxable!

The article reports:

Obamacare enrollees who received subsidies to help pay for coverage will soon have to reconcile how much they actually earned in 2014 with how much they estimated when they applied many, many months ago.

This will likely lead to some very unhappy Americans. Those who underestimated their income either will receive smaller tax refunds or will owe the IRS money.

That’s because subsidies are actually tax credits and are based on annual income, but folks got their 2014 subsidy before knowing exactly what they’d make in 2014. So you’ll have to reconcile the two with the IRS during the upcoming tax filing season.

Filing taxes has never been any fun–ObamaCare just made it worse.

Subsidies were what kept the cost of ObamaCare down for subscribers:

We’re not talking chump change. Those who applied through the federal exchange received an average monthly subsidy of $264, according to the most recent figures reported by the Obama administration. They only had to pay $82 a month, on average, for coverage, Roughly 85% of total enrollees received help with insurance premiums. The administration last month said 2014 enrollment was 6.7 million.

Those who underestimated their earnings could owe thousands of dollars, though there is a $2,500 cap for those who remain eligible for subsidies. The threshold for eligibility is based on income – $45,900 for an individual and $94,200 for a family in 2014.

In June, the Supreme Court is expected to rule on whether or not subsidies can be given in states that did not create healthcare exchanges. If the ruling says no, we can expect total chaos in the healthcare sector of the economy while everyone regroups. Meanwhile, the taxman cometh!

These Are The People Who Will Be In Charge Of ObamaCare

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Every time someone threatens to cut government spending, big government types begin screaming that spending is already cut to the bone. Well, if that is true, why don’t we just cut government waste and fraud?

Today The Blaze posted a story about some recent tax refunds mailed out by the Internal Revenue Service (IRS).

The article reports:

The Internal Revenue Service issued $4 billion in fraudulent tax refunds last year to people using stolen identities, with some of the money going to addresses in Bulgaria, Lithuania and Ireland, according to an inspector general’s report released Thursday.

The IRS sent a total of 655 tax refunds to a single address in Lithuania, and 343 refunds went to a lone address in Shanghai.

Again, 343 payments to one address.

There are certain red flags that result in American taxpayers being audited–a change in giving habits, a drastic change in income, and various other things will set off a flag and result in an audit. Doesn’t the IRS software have the capacity to set off a flag if 343 people have the same address? I realize a large apartment building could easily house 343 people, but wouldn’t they have individual addresses? Shouldn’t that many people at the same address raise a question with someone?

Florida is a prime target for identity theft for the purpose of  tax fraud. The article reports:

Among individual homes, one address in Orlando received 580 tax refunds totaling $870,000 last year, the report said. Another Orlando address received 291 refunds totaling $466,000.

The article reports that the IRS has developed a computer program to deal with the problem of identity theft and false tax returns. Let’s hope it is more secure than the ObamaCare website. Meanwhile, let’s see if we can end enough fraud to help with the budget deficit.

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