earned income credit and the people who abuse it?

I challenged my senator to get the government to reach out to taxpayers regarding the earned income credit that low income people receive. Everyone I work with knows of someone who gets this credit and the stories are alarming. Ended up we knew people that earned (by choice) less then $ 5000 in 2009 just so they would qualify for all the freebies out there that us hard working tax payers pay for. We pay for their heat, food, medical, rent, even cable and cell phones. Even worse we pay the earned income credit that in some cases is as high as $ 16,000. The sad part is that instead of using that big chunk of cash they get every year to pay that gas bill or dr. bills or to buy a bus pass they buy cars, go on vacation, big screen tvs, etc. etc. So I am asking you to share a story of someone you know that got that big wad of cash and how they spent it.
(my story)
I know a family where dad gets disability (he can work ) mom works part time so they qualify (u must have a earned income) oldest son is 19, goes to community college (on the taxpayers) 3 other kids 14, 15, 12. Home was foreclosed but we the taxpayers helped them get a new one. mom does daycare ($ 300 cash, not reported) they receive food card, medical card, heat assistance, and 3 of them have a cell phone for free. There are 3 cars in the family. In Feb. they got their wad of cash $ 12,600 all of which is earned income credit. they treated themselves to a weekend vacation, a 62 in. tv and ps3 (they had to have the blue ray) and a riding lawn mower (they have lots of land)

Please share with the public (taxpayers) a story you know of. and how you feel about it.
check the chart. the max is not 5000. my problem is how they are spending it. (not in all cases but in many)
i obviously pissed off some of you, not what i intended to do. I did mean their refund. and i have no problem helping people who fall on hard times, I have problems helping people buy things when they can’t even pay their bills.

Answer by travelguruette
The max eic is 5000 something. You cannot get 12k in eic. I know people who have used it for big screen tvs. A family that earns15k and gets eic and all the free medical, welfare, etc makes more in the long run than someone who makes 25k and that person cant get medical.

Answer by viajero_intergalactico
Yeah, that’s too bad.

But while it really upsets me to know that some people abuse the EIC, it is low on my list of things that bother me. Stopping violent crime is what really bothers me. For example, that idiot who killed those girls in Orange County…how can we stop that from happening? or all the liquor store robberies where the mom and pop owners get shot. for the moment, i could care less that i buy plasma t.v.’s and vacations for a few theives (ok i do care, but not that much).

But I hear ya.

Answer by Judy
YOU check the chart. The max EIC this year was $ 5657, for three of more qualifying children, and income in the range to maximize EIC. They’d have also gotten $ 4000 for the additional child tax credit, so your total number is still a bit high. If mom made over around $ 6600 they’d also have gotten $ 800 for the Making Work Pay credit. She might have actually netted MORE taking EIC into consideration if she had reported the daycare income even after paying the tax on it, so she might have shot herself in the foot there. No education credit for the college student if they aren’t paying for it.

OK you’re right, this family is really milking the system, and of course they aren’t the only ones. Unfortunately, anytime there’s a pot of money to be had easily, that happens. Just look at the first time homebuyer $ 8000 credit, where the fraud rate among applicants is super-high. Or at the other end of the income scale, look at Bernie Madoff and Ken Lay.

I realize there are serious abuses in the EIC area – anyone reading this forum sees that pretty much daily. And I’m real glad that this year the IRS is auditing so many of the returns with EIC. And people who decided to milk the system and collect unemployment and not even really look for a job, and there are many of those, were probably pretty shocked to find out that they didn’t qualify for EIC, having no earned income. People looking hard for a job though and not finding one, then not getting EIC either, got an extra kick while they were down though.

But what about the people who DO qualify honestly? OK, here’s an example of one whose return I prepare. Five kids, oldest 9 year old twins. Dad works, makes around $ 30K. Mom is a SAHM – with that many young kids, no way to pay for day care and work outside the home. Their refund was around $ 9K, used to catch up on bills from the year and to do needed home repairs. I can’t begrudge them the EIC, although I do grit my teeth right along with you when the horror stories surface.

Answer by Bostonian In MO
While there certainly are people who milk or attempt to abuse the system, your highly inaccurate rant does little to put a finger on the true problem.

First off “we pay the earned income credit that in some cases is as high as $ 16,000″ is total rubbish. The max EIC is $ 5,657. When you make up numbers to add weight to your position you marginalize yourself as a whining crackpot.

Next, “dad gets disability (he can work ).” So what? Many folks on disability can catch a menial minimum wage job that pays less than their disability. If you are unable to work in your profession due to disability you are eligible for SSDI. There is no requirement that you take ANY employment regardless of pay and only an overly proud fool would work for minimum wage that pays less than SSDI for many families. The rest of your “horror story” doesn’t cut it. The max EIC is $ 5,657, not $ 12,000. Even if they caught the max Additional Child Tax Credit of $ 3,000 (possible) that’s still a boatload less than $ 12,600. The rest simply doesn’t add up, and some of it, like 3 free cell phones, are just bogus.

Here are some REAL “horror stories” from my files:

Single mother with 2 kids and a grand-child. Been struggling along for several years on crap $ 8 to $ 9 an hour jobs with no benefits. About 10 years ago she lucked out and was able to buy a small home. (In this area, mortgage payments are considerably less than rent, her only salvation.) The kids are all on Medicaid but she can’t get coverage for herself as her “income” is too high. The EIC she’d catch in Feb or Mar ($ 3k to $ 4k at the time) of each year would allow her to catch up on her mortgage payment and get current with the utility companies. As the winter heating season set in, she’d fall behind again. She’s driving a 17 year old “beater” that her son, thankfully with a flair for auto mechanics, keeps running for her. As the economy started to tank in 2007, she lost her job. She did a stretch on unemployment at less than $ 200 a week, got retraining benefits from the state and worked for a while as a paralegal. She was quite good but pushing 50 and with health issues she isn’t the “piece of fluff” that most attorneys want on the front desk. She lucked out and was hired by the county working at the courthouse for a while until the budget cuts came and dumped her on unemployment again. Her EIC for 2007 and 2008 was less than half of what it had been due to the limited earned income for the year. She’s now been unemployed for over a year. Her total refund this year was $ 800 and she only got that because she had tax withheld from her unemployment benefits. No earned income for 2009 so no EIC and no ACTC. She has been though training again into the medical field and the job prospects look much better but she was recently diagnosed with cancer. Since it’s “only stage one” she can’t get treatment and now that she has a pre-existing condition even if she does find work, it won’t be covered.

A divorced dad with 5 kids, 2 still minors. He used to be a very highly paid heavy equipment mechanic and consulted with the major manufacturers on training mechanics. He earned a 6-figure income. An industrial accident and a rare bone disease left him unable to work in his field. His SSDI, while appearing generous on the surface at around $ 2,400 a month, barely covers his expenses. He did get job training through SSA and the state but as he’s now pushing 60, nobody is willing to hire him in an entry level IT position. His tax refunds are $ 0. He recently declared bankruptcy over the Medicare co-pays that he couldn’t possibly ever afford to pay. He now lives in a trailer on some land that his sister left to him.

A more important question than people who abuse the system is “What about the system that abuses people?”

What about a system that allows a minimum wage half of what it should have been had it kept pace with inflation since 1966?

What about a system that replaces a livable minimum wage with taxpayer funded CORPORATE welfare via the EIC. The EIC was a trade-off by Republicans to keep the minimum wage artificially low.

What about a system that forces someone to collect disability because a survival on the minimum wage is virtually impossible nation-wide?

What about a system that rewards corporations that export American jobs to 3rd world countries via tax breaks for any foreign income taxes paid and doesn’t even require proof of the foreign taxes? (Individuals working overseas get no such trust from the law — they have to prove what they paid to get their break.)

Answer by spalmer
There are plenty of people who “play” the system, but there are also plenty who are the working poor and don’t play the system. I work full-time and go to school full-time, and luckily, I do receive EIC each year (one child) and am grateful for the extra help (I’m a single mom). My tax refund goes into a savings account and helps me in paying any extra bills that come around each year, as well as helps pay for any emergencies that may occur or home maintenance that needs done. My son and I’s yearly vacations generally include one-day at a local theme park (within driving distance), or a day-trip to the zoo. I don’t use credit cards, and more than once I’ve had to visit local food banks to obtain food for my son and I (apparantly over the income-limit for food stamps).

You cannot tell people how to spend their refunds, although I think there should be stricter criteria for receiving government benefits and tax credits. The system isn’t fair to those who live at the poverty level and are working full-time… I was actually told on the phone today (by the “welfare” office)that if I would cut my hours by 10 hours a month, then I would qualify for food stamps. I was in shock! Perhaps they should deduct the full amount of my mortgage payment instead of only 40 percent of it. I was unemployed for six months in 2008 and finally had to accept a job at a lower-wage… therefore, making the monthly mortgage payments takes a much larger percentage of my income than it used to. Unfortunately, public assistance will still only allow a certain percentage towards housing, not what you’re actually paying. It is hard for me to work my butt off, day in and day out, trying to make a better life for myself and my son — when, I could easily cut back to part-time work and receive money in government assistance. They make it so that it’s not worth it to work full-time. Regardless of if I have to eat from a food pantry though, I will not cut back my hours — I will keep working hard and aiming for a promotion. You are wrong about your calculations… EIC does not go up to $ 16,000. They may have received the additional child tax credits, as well as other credits to their refund — but EIC is not $ 16,000/year.

Know better? Leave your own answer in the comments!

I’m on Social Security Disability and get 70% of my rent paid for. On top of that, I am one of the few who has just the right amount of income so the Medicare part D works in my favor so I only have to pay about $ 15 per month for $ 2000 worth of medication. And I have 100% subsidy from Social Security for Medicare part D.
I don’t mind standing in line at the food bank once a month.

Last year I worked and earned just over $ 2000 exempt, and I’m getting back $ 200 in tax refund. I feel bad about this.

I get a discount on my phone bill because I’m low income.

I have a cell phone, DSL, closet full of clothes, a spoiled cat, a good car, furniture, dishes, everything. I can not afford cable, however, my Section 8 apartment gives me free cable TV.

I have free time galore. But not good health. To me, health is everything.

Now, I’m thinking that someone who makes about $ 2500 per month, which around here (Seattle) is barely enough to live on, doesn’t qualify for anything at all, and might end up with as much as I do after all the bills are paid. Not only that, but if they do not have health insurance, they better not get sick. They have extra expenses for gas, clothes, lunch, parking, etc. because they work.
I just read this news:

“People who get food stamps — 30 million and growing — will get more. People drawing unemployment checks — nearly 5 million and growing — would get an extra $ 25, and keep those checks coming longer. People who get Supplemental Security Income — 7 million poor Americans who are elderly, blind or disabled — would get one-time extra payments of $ 250. ”

Answer by oldschoolio
obviously, you are better off financially ( then you would be without ssdi).

i wish i could get some assistance. I work like a slave – until i can barely stand up – to earn a pitiful wage upon which i can barely survive. I have no insurence, and i have to pay full price for everything.

Answer by ladyindica
If you can get it, take it and don’t think about it. If anyone else doesn’t like it, tell them to kiss your butt.

Answer by shiprepairwoman
SSDI is a pretty good deal especially if you combine it with other benefits.

I got my SS statement today saying if I got SSDI I would get 1792 a month. SS at 62 would be 1329 so if I had a choice I would rather get SSDI. I don’t know if I would qualify for section 8 or food stamps on that much income but I could get a property tax reductions.

I am 60 now and not disabled yet but if I can’t work until I am 67 I would be better off on SSDI than SS.

People who are against SS forget about the great benefits for the disabled, orphaned kids and widow/widowers. It isn’t welfare so you are allowed to have gifts from family and own things even keep all your money you have invested. You do need to have nearly no assets to get things like food stamps and shouldn’t take from food banks unless you need to but if you need it go for it.

Know better? Leave your own answer in the comments!
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