an_ordinary_guy_...[at]hotmail.com (Bill) wrote:
- quote -

That is why I gave the answer to the closest $100. As is
generally my practice, if I have not been paid (yet), you
don't get an exact answer.

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Paul Thomas, CPA <paulthomascpapc[at]bellsouth.net> wrote:
- quote -

"If I got this significantly wrong I won't take a fee."
What seems questionable about that sort of policy?
(Especially since it's a $200 simple return; I wouldn't
expect the same guarantee on a $5,000 very complex return.)

Seth

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tttvot[at]yahoo.com posted:

[OP and all responses omitted for brevity.]

That "Please help" certainly elicited a lot of replies.

It was also fascinating to see the range of answers, when
many of us couldn't resist taking a quick, rough crack at
running the numbers. Several agreed on the $1554 SE tax, but
EIC amounts were all over the place. (I simply checked the
MFJ with 2 children EIC Table line for 11,000 to 11,050 for
a ballpark figure, and found $4410.)

Guess that shows the "helpful" spirit is alive and well in
misc.taxes.moderated.

But it also shows why tax prep stupifies the average
American. If 15+ pros (or semi-pros, like me) can arrive at
15 different "estimated" answers, the poor untutored
taxpayer must be excused for his bewilderment.

<Smile
Bill

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ttt...[at]yahoo.com wrote:

- quote -

No, that is not true.

You have apparently not heard about the Earned Income Credit
(EITC), which will give you a refund (or reduce your taxes)
even if you had nothing withheld. It is targeted for low and
moderate income families, such as yours. It is discussed in
your 1040 instruction booklet, or in much more detail in IRS
Pub 596. Or, you can just ask your CPA to explain it to you
(after all, you paid him for this return!).

However, based on the AGI figure you gave ($11,000 net
income) and your family size (married, 2 children), your
refund/credit should be about $4,400 this year. If your CPA
erred, he seems to have forgotten one child! Definitely a
reason to contact him. Maybe he doesn't know about the baby.

I'm surprised that you have not been aware of this Credit,
as it has been around for many years. You might want to
check your tax returns from 2004 and 2005 to make sure that
you received this benefit (older returns are now closed for
additional refunds). If the credit does not show on these
returns then you should be filing amended returns for those
two years (assuming you meet all the qualifications).

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ttt...[at]yahoo.com wrote:

- quote -

Actually, the IRS has what it calls refundable credits. One
of these credits is the Earned Income credit. Another one
is the child care credit. These credits are offset against
the taxes you owe. If the credits are more than the tax you
owe, then you will get a refund. HOWEVER, no reputable CPA
will guarantee a refund. The fee is a little high, but
probably not unreasonable, depending on where you live. The
CPA is not responsible for the information on the return,
only the taxpayer is.

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tttvot[at]yahoo.com wrote:

- quote -

My computer calculates a $2,596 refund, assuming those are
really all the pieces you have, and that the amounts are
exact.

- quote -

Earned Income Credit.

Is there any particular reason you didn't ask the person who
prepared your returns to explain them to you before you
signed them?

Phoebe

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ttt...[at]yahoo.com wrote:

- quote -

$2,700 is in the right ball park for a self-employed person
with wife and two kids.

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ttt...[at]yahoo.com wrote:

- quote -

You are receiving an earned income credit, this is why you
are getting money back.

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ttt...[at]yahoo.com wrote:

- quote -

It's called the Earned Income Tax Credit and is a refundable
credit. That means that even if you owe no taxes, the IRS
will refund you this credit. In your income range with 2
children, it should be about $4,000. You probably also
qualify for the telephone excise tax refund of $60.

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<tttvot[at]yahoo.com> wrote:

- quote -

of the ordinary.

with 2 kids $11,000 in SE income and no expenses associated
with the income and filing a joint return I get about
$2,600 with the Earned Income Credit and without figuring a
state potential.

I do have a problem with your "CPA verbally gauranteed the
"REFUND" and stated that he would refund us the $200 fee if
the IRS does not pay."

If this was before s/he knew anything about your situation
the statement is unethical/illegal ... If however it was
after s/he knew your details and was in answer to a query
from you about where you stand then I've no problem with it.

Make your own decision based on my posting.

Regard,

Mark Rigotti, CPA

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tttvot[at]yahoo.com posted:

- quote -

First of all, let's dispense with the "rip-off" concern:
You paid the CPA for his knowledge of tax law, and the
preparation of your return. $200 does not seem
extraordinary, considering the several forms involved.

Second, the resulting refund is not at all implausible.
Here's how it might have been calculated: You "earned"
$11,000 as a "self-employed" person. On that, you would be
charged $1554 for Social Security and Medicare (calculated
on Schedule SE, based on 92.35% of your total earnings).

With a non-working spouse and two children, your
approximately $11,000 AGI would be erased by the standard
deduction ($10,300 for MFJ) and 4 exemptions [at] $3300 each --
for a total of $13,200.

The Self Employment tax (line 58 on Form 1040) would be
shown as $1554, as noted above, but then you and your spouse
would be entitled to $4410 as an Earned Income Credit shown
on line 66a (and calculated through filing of the EIC Form
and Worksheet).

Subtract $1554 from $4410, and the result is $2856. That's
close enough to the "about $2700" that you cited, that the
rounding of some of your numbers could easily account for
the difference.

So it is true, that you could be perfectly entitled to that
"refund" despite having paid no income taxes at all. (The
government purpose behind this program, is to encourage you
to work and earn income rather than simply draw welfare.)

Ain't life grand in the USA?

Bill

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<tttvot[at]yahoo.com> wrote
- quote -

I'm not going to run the numbers, but yes, the refundable
child tax credit and EIC may be sufficient to more than
cover any tax liability from SE tax.

- quote -

Probably not. My return fees start about that level.

- quote -

I would question that policy.

- quote -

Yes, you are ultimately responsible.

- quote -

Actually, Congress has provided for the very situation you
are in. EITC and a refundable child tax credit may be the
issues you are benefiting from.

You should have a copy of your return, look at lines 66 and
68. If there are dollars there then that's most likely
what's causing you to get a refund when you didn't pay
anything in.

It's legit if it's there - or so you should assume.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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Your income tax is -0-. Your Self employment (social
security) tax is $1554. Your Earned Income Tax Credit is
$4090. Your Longdistance telephone excise tax credit is
$60. Total payments are $4150. Your refund should be
$2596. If this is what your CPA said s/he is correct.

Missy Doyle

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- quote -

Sounds about right. If you earned $11,000 from self
employment, you would owe no income tax at all (standard
deduction for MFJ plus 4 exemptions totals $23,500). You
would owe self employment tax of about 15% or $1650. You get
the Earned Income Credit of $4,300, netting you a refund of
$2,650.

- quote -

The Earned Income Credit is "free money" potentially given
to families earning up to $38,000.

And this year you also get $60 as a refund for the telephone
excise tax they illegally collected from you.

--
Don EA in Upstate NY

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- quote -

Yes, it's possible. Using just the information that you gave
here, I came up with a refund of $2,596. There may be some
details you omitted, or I may have missed something, that
could add another $100 or so.

- quote -

It's not a rip-off, but you could have gotten your tax
return done for free at a VITA center. Try that next year if
your income is still low.

- quote -

That's not entirely true. They do give money to people with
low income in many cases. Specifically, it appears that you
qualify for the Earned Income Credit (EIC), which is, in
fact, a program to help working people with low income by
giving them a tax "refund" of more than they paid.

Bob Sandler

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tttvot[at]yahoo.com wrote:

- quote -

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.

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tttvot[at]yahoo.com writes:

- quote -

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[at]animato.arlington.ma.us

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<tttvot[at]yahoo.com> wrote:

- quote -

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

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- quote -

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

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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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