Tax Guru – Ker$tetter Letter

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Archive for the ‘EIC’ Category

Profiting from tax returns?

Posted by taxguru on May 18, 2007

Q:

Subject: a tax refund isn’t a profit

Hi Kerry,

In regards to the cartoon with the subtitle “A tax refund isn’t a profit…”, couldn’t it be argued that a tax refund is in fact a profit for those who qualify for the EIC?

Keep up the great work on the site!

Thanks,

 

A:

That is an excellent point.  While I was obviously echoing the cartoonist’s point that recovering taxes you had paid in during the previous year isn’t a net profit; the EIC welfare program does allow many people to receive thousands of dollars more than they originally paid in. 

Referring to the EIC as a profit from a tax return is actually a valid description, as anyone will understand who has finessed Schedule C expenses.  Often, going light on expenses results in a much higher net refund on the 1040 because of the ridiculous way by which EIC is calculated. 

Thanks for writing and pointing that out.

Kerry

 

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