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Nonsense. They give them too much because they are too lazy to go adjust their withholding, it has nothing to do with understanding the concept of interest.
Withholding rules for supplemental wages require a 22% withholding rate. If you're someone like me where your federal tax rate is under 10% and over 40% of your annual income comes from bonus/supplemental, its impossible not to over-withhold. I think I deserve the interest I would be getting if I had the money in the bank.
Sales people with lots of dependents have it the worst. Imagine a father of 5 children that earned a monthly salary of $1,500 and commission/bonus of $70,000. The $88k earned would put him in a really low effective bracket (probably close to 0% with the $10k child tax credit). Even knowing that withholding should be almost $0, he would still be forced have $15,400 withheld because its supplemental income.
...and no, having supplemental income does not mean you are too lazy to adjust your withholding.
Then they can't pay interest, either, so the discussion has hit a semantic wall.. Those of us who speak English understand the concept of "they" as referring to those who wave the power.
Certainly not. You’re in complete control of how much is withheld from your check. Why on earth should the IRS pay interest certainly not. You’re in complete control of how much is withheld from your check. Why on earth the IRS pay interest on money you chose to have withheld??
So do you oppose government regulation of 'payday loan' shops? After all, the individual is in complete control of how much they borrow. Why on earth should the government step in to regulate the money you have chosen to borrow?
If your answer is 'no,' at least you're being consistent. But if you agree with the payday loan regs, you're being inconsistent.
So do you oppose government regulation of 'payday loan' shops? After all, the individual is in complete control of how much they borrow. Why on earth should the government step in to regulate the money you have chosen to borrow?
If your answer is 'no,' at least you're being consistent. But if you agree with the payday loan regs, you're being inconsistent.
Apples and oranges. The IRS has no idea what your tax liability is until you file. If you had to much withheld, the IRS can't be held responsible for that. They simply have no way of knowing that - UNTIL YOU FILE.
Now once you file, if you ARE owed a refund, and they are late with that refund, then, and only then, should you be paid interest. Which they do, if the refund is not issued within 45 days.
Apples and oranges. The IRS has no idea what your tax liability is until you file. If you had to much withheld, the IRS can't be held responsible for that. They simply have no way of knowing that - UNTIL YOU FILE.
Now once you file, if you ARE owed a refund, and they are late with that refund, then, and only then, should you be paid interest. Which they do, if the refund is not issued within 45 days.
Thanks for reply.
It is apples and apples in the sense that in both cases, Joe Sixpack is getting ripped off by unscrupulous borrowing terms. In the case of the IRS refunds, Joe Sixpack is giving an interest-free loan to the federal gov't. It still represents an interest free-loan whether the refund check is over 45 days late or not. The money is being withheld over time, but not actually due until April 15. It's an interest free loan. A rip-off by the government.
The distinction between the on-time refund and 45-day late refund is arbitrary. Both are loans from taxpayer to government. Interest should be paid in both cases.
In the case of the payday loan operations, they are also giving unscrupulous loan terms, and as with withholding, it's entirely on a voluntary basis.
In both cases, the offending parties are failing to act as 'fiduciaries' so to speak. The payday loan shops make no claim of being fiduciaries, but the federal gov't is inherently supposed to be a 'fiduciary' (so to speak). But they are not; if they were they'd be paying massive fines if not going to jail.
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