Comments on: The Greedy Non-Rich http://www.pappasontaxes.com/index.php/2009/11/20/the-greedy-poor/ Pappas on Taxation Thu, 09 Feb 2012 04:09:25 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Widespread Fraud with First-Time Homebuyer Credit http://www.pappasontaxes.com/index.php/2009/11/20/the-greedy-poor/comment-page-1/#comment-6057 Widespread Fraud with First-Time Homebuyer Credit Wed, 23 Jun 2010 23:27:57 +0000 http://blog.pappastax.com/?p=11423#comment-6057 [...] [...] [...] [...]

]]> By: Peter http://www.pappasontaxes.com/index.php/2009/11/20/the-greedy-poor/comment-page-1/#comment-3360 Peter Fri, 20 Nov 2009 15:24:49 +0000 http://blog.pappastax.com/?p=11423#comment-3360 Hi Mary, I can always count on you to set me straight. I was referring to the EIC and homebuyer credits, but I can see I didn't make myself very clear. I hate to go all Ayn Rand on you, but all classes of "people" are greedy, not just the rich. It's part of the human condition. As with all credits and deductions, some taxpayers make honest mistakes. But there are many who seize the chance for a freebie and commit outright fraud. Hi Mary,

I can always count on you to set me straight.

I was referring to the EIC and homebuyer credits, but I can see I didn’t make myself very clear.

I hate to go all Ayn Rand on you, but all classes of “people” are greedy, not just the rich. It’s part of the human condition.

As with all credits and deductions, some taxpayers make honest mistakes. But there are many who seize the chance for a freebie and commit outright fraud.

]]> By: Mary http://www.pappasontaxes.com/index.php/2009/11/20/the-greedy-poor/comment-page-1/#comment-3359 Mary Fri, 20 Nov 2009 15:09:21 +0000 http://blog.pappastax.com/?p=11423#comment-3359 Ahem, Peter. Check your facts! The education credits TIGTA studied were NOT refundable credits. And they did not go to the poor. Prior to this tax year, all education credits have been NON-refundable. As such, the benefits of the education credits accrued primarily to the middle-class, not to the poor. So the particular TIGTA study you cite is not evidence of the "greedy poor" because poor people have not gotten benefits from education credits. We always run the education credit numbers for clients at our VITA site, just to be sure, but I can't recall a single case of a low-income taxpayer who got any benefit whatsoever of claiming a federal education credit on his return. That will change with the 2009 tax returns they file during the 2010 filing season, because the Hope Credit (previously non-refundable) has morphed into the American Opportunity Credit, which will reach a broader set of Americans, on both the lower and higher ends. http://www.irs.gov/newsroom/article/0,,id=205674,00.html If you insist on using the TIGTA study as evidence that anyone is "greedy," it would be the middle class, because they were the primary beneficiaries of the education credits during the time period TIGTA studied. However, having dealt with the complexity of the tax code, I think it's more reasonable to chalk this particular error up to confusion. The rules for the education credits are complicated and confusing. The primary form of confusion is that some taxpayers claimed the Hope credit for the same student for more than the maximum two years allowable. However, some taxpayers claimed the Hope when the Lifetime credit (which is allowable for an unlimited number of years) would actually have gotten them more money than the Hope did. Such taxpayers were confused rather than greedy. Ahem, Peter. Check your facts!

The education credits TIGTA studied were NOT refundable credits. And they did not go to the poor.

Prior to this tax year, all education credits have been NON-refundable.

As such, the benefits of the education credits accrued primarily to the middle-class, not to the poor. So the particular TIGTA study you cite is not evidence of the “greedy poor” because poor people have not gotten benefits from education credits.

We always run the education credit numbers for clients at our VITA site, just to be sure, but I can’t recall a single case of a low-income taxpayer who got any benefit whatsoever of claiming a federal education credit on his return.

That will change with the 2009 tax returns they file during the 2010 filing season, because the Hope Credit (previously non-refundable) has morphed into the American Opportunity Credit, which will reach a broader set of Americans, on both the lower and higher ends.
http://www.irs.gov/newsroom/article/0,,id=205674,00.html

If you insist on using the TIGTA study as evidence that anyone is “greedy,” it would be the middle class, because they were the primary beneficiaries of the education credits during the time period TIGTA studied. However, having dealt with the complexity of the tax code, I think it’s more reasonable to chalk this particular error up to confusion. The rules for the education credits are complicated and confusing. The primary form of confusion is that some taxpayers claimed the Hope credit for the same student for more than the maximum two years allowable. However, some taxpayers claimed the Hope when the Lifetime credit (which is allowable for an unlimited number of years) would actually have gotten them more money than the Hope did. Such taxpayers were confused rather than greedy.

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