taxes (insurance, percentage, refund, deduction)

[glass_of_merlot]

Why does it seam that you get more back on your tax return when you make less money?
This year we are bringing in alot less then we have done previous years. And still It seams like we will get back more taxes then what we actually paid out?

[user_id]

Because the tax system is progressive.

[sterlinggirl]

The tax system is being used as a welfare program to buy votes. I don't agree with the principle and will vote against politicians who try to expand these programs, but if a law is already on the books you should take advantage of it.

Back when I was in college, I put a lot of effort into determining the optimal income to get the most money from the IRS while maxing out what I could get from need based educational grants. Once I hit that level I would quit working for the year because it would have actually cost me more money than I would have made. Many of my classmates worked twice as hard as I did and were worse off financially because they refused to spend a few hours learning the rules.

Many people use a similar strategy to avoid the AMT.

[Submariner]

If your income dropped, but you still had the same old percentage being with-held for taxes; then yes. You would get back a much larger 'refund'.

Anytime that your income changes, you can re-file your with-holding, to update it and stop this from happening.

Eventually as your income lessens you will stop paying income taxes entirely, because you will be below the minimum that is set by the 'Standard deduction' and 'Exemptions'.

[wheelsup]

The income tax system originally was swallowed by the masses back in 1913 because it was stated only the wealthy would pay it - around 10% of the population. It's expanded greatly beyond that.

[eofelis]

Originally Posted by sterlinggirl

Back when I was in college, I put a lot of effort into determining the optimal income to get the most money from the IRS while maxing out what I could get from need based educational grants. Once I hit that level I would quit working for the year because it would have actually cost me more money than I would have made. Many of my classmates worked twice as hard as I did and were worse off financially because they refused to spend a few hours learning the rules.

Bingo.
I recently graduated from college debt free. I deliberately kept my income very low so I got the maximum on Pell Grants and State Grants. I worked on campus for a while and later had a modest paid internship job. I also kept my GPA very high to get the good scholarships. I roughly estimate that I got ~$40,000 in grants and scholarships while in college. One semester I got my tuition paid (~$2000) and also got a check for $4500 of leftover financial aid award.

Sometimes I'd try to explain to other students about how to get good financial aid like this and they had never even bothered to fill out a FASFA or apply for a scholarship. When I started college I made it a priority project to find "free" money to go to school. It worked for me.

[lchoro]

they added another refundable tax credit this year which amounts to $400 or $800.

they could've actually paid for the entire health insurance expansion by eliminating these tax rebates. you wouldn't have this class warfare going on over health reform.