why are my tax returns so low?
Im a permanently disabled father with my son who I have full time I have all rights and more and I only receive 1000$ for my return I do recive SSDI and he recive survivor benefits aswell. but my friend is also a single father and he gets 4800$.
- Beverly SLv 72 months ago
I wouldn't think you would even file since you don't have any Earned Income. You should not need to file & you won't receive a refund since you paid no taxes on this type of income. Your friend probably works/has earned income & is getting the earned income credit.
- Max HooplaLv 72 months ago
You didn't overpay very much in 2019.
- StephenWeinsteinLv 72 months ago
That's not low. A better question would be why your friend is getting so much.
Also, normally, a person who hasn't worked doesn't get anything, so I'm not sure why you are.
- JudyLv 72 months ago
It sounds like your friend has EARNED income, from working, so qualifies for EIC.
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- Coffee DrinkerLv 72 months ago
There are 2 major refundable credits in the US tax code which are meant to encourage parents of dependent children to work and contribute to society even though they might not earn much more than what they'd get if they stayed home and just collected welfare checks.
Those credits are the child tax credit (CTC) - worth up to $2000 per child with up to $1400 of that value refundable.
And the Earned Income Tax Credit (EITC) - worth up to $3,526 for a parent with one child, and fully refundable.
the term "refundable" credit means that even if the peson's tax liability is $0, the IRS will pay them the remaining value of the credit. Whereas "non-refundable" credits can only help reduce your tax liability to $0, but any remaining value is lost.
Both the EITC and refundable portion of CTC require you to have "earned" income, which is defined as income you earned by working at a job (wages) or income earned by working in self employment to generate business profits for yourself (net profits). There's also an option for soldiers to include non-taxable combat pay in the calculation.
So, this friend of yours is most likely qualifying for some combination of the CTC and EITC, to the tune of about $4800 total value. He gets those because he has BOTH earned income from his job AND a dependent child.
Since he has the job anyway, and would probably work even if he didn't have a child, he attributes the refund to having a child.But in reality, its both the earned income and the child that qualify for him. If he lost his job and had no earned income, he wouldn't get those big refundable credits just for having a child, he'd be missing the other piece - the earned income.
If all of your income comes from disability benefits and your son's survivor benefits, then you have no "earned" income and therefore you don't qualify for the EITC. You can still claim the non-refundable portion of the CTC up to $2000 to help offset the taxes you'd owe if you didn't have your son, but if that reduces your tax liability to $0 you do not get a refund of the excess amount.So the $1000 refund you are seeing is probably a refund of your own money. This means you paid the IRS this year through some source - perhaps tax withholding on the disability benefits - and those tax payments were $1,000 more than what you actually owed after computing your tax liability and subtracting the non-refundable child tax credit for your son.
EDIT: In one of your comments you mention that your tax consultant said you could let the child's mother claim him and she'd get about $5000. If all 3 of you live together, then that's probably correct and you should do that.
But if your son lives with you, and his Mom is NOT living in the same household, then you need to fire this "tax consultant" because they are proposing that you commit tax fraud (they might know this, or might be too stupid to realize their suggestion is illegal, but either way you should not trust them for tax advice).
The IRS allows a parent to legally give the child tax credit to the other parent even if that parent does not live with the child. The parent the child physically lives with for more than half the year is called the "custodial parent" and the parent that doesn't live with the child is the "non-custodial parent" - By default the custodial parent gets ALL of the tax benefits & credits for the child.
Using form 8332, the custodial parent can give the child tax credit to the non-custodial parent, either as a one time thing or recurring year after year. This is perfectly legal, but would ONLY give your son's Mom the $2000 CTC.
The EITC cannot be transferred in this way, and ONLY the custodial parent who actually lives with the child can claim the EITC for that child.
So it sounds as though this "tax consultant" is proposing that you guys lie to the IRS about where your son lives, so that his Mom can claim the EITC. That might sound innocent enough but the IRS views it as a serious crime and will slap both of you with huge penalties and a 10 year ban on claiming the EITC in the future if you get caught, and would probably put that tax consultant out of business and into bankruptcy.
Its possible this tax consultant is intentionally proposing tax fraud, or maybe they just don't know the law well enough to understand that this is a serious crime. But whether they're a criminal or just plain ignorant, I'd steer WAY clear of them and forget every piece of advice they ever gave you.
- Anonymous2 months ago
Because you don't work.
To your edit...how does your son receive Survivors benefits if his mother is still alive ? ! ? ! ?
- curtisports2Lv 72 months ago
You don't work. You don't pay taxes. You are getting money directly from working taxpayers in the form of tax credits in REFUND, not RETURN. A return is the papers you file.
Your friend probably works, and because of that, can get the same child tax credit you do but also an additional credit for earned income - which is still paid by other working taxpayers - on top of getting back some or all of what was taken out of his pay. He might also get the additional child tax credit, which you would not get because you don't work.
But, up to $1,400 of the basic child tax credit is refundable when you owe no tax and paid no tax because you didn't work. You should be getting a refund of at least $1,400.
- SlickterpLv 72 months ago
Because you have no earned income. You realistically are lucky to get anything at all.
Your friend works, and has income, meaning he qualifies for certain credits you do not.
- KaleyKLv 72 months ago
Your federal tax refund is a function of tax liability minus tax payments. If you have overpaid your liability, that's how you get a refund. Your friend has overpaid his tax liability by $4,800. You have overpaid your tax liability by $1,000. If you want a bigger refund, then overpay your tax liability by a larger amount.
- Wayne ZLv 72 months ago
There are tax credits in the tax code for children that encourage work.
Both the Earned Income Tax Credit and the Additional Child Tax Credit go up to a certain point as earned income increases. Earned income is income from working. Something like SSDI does not count.
So, even if your total income is similar to your friend, the refund amounts can be very different depending upon the type of income.