Welfare Gone Extreme: Family Making $39,000/Yr. Gets $54,000 Tax Refund..

[Obama 2012 1,714]

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http://www.walletpop.com/2011/04/04/family-receives-54-000-tax-refund/

The IRS recently announced that the average federal income tax refund this year is expected to be $3,000. That makes the Wards of Smithfield, N.C., quite above average. After they had their taxes prepared this year, Thelma and Dan Ward found out they're entitled to an astounding $54,000 refund.

The Wards make about $39,000 per year. You would guess that would make a tax refund such as theirs impossible, right? Not at all, thanks to refundable tax credits.

Refundable tax credits are the new darling of the tax world. Traditional tax credits reduce the tax that you owe dollar for dollar until you reach zero tax liability -- your tax refund cannot, with a traditional tax credit, exceed the amount of your withholding. However, refundable tax credits mean that you can reduce your tax liability to zero and then have the entire amount of the additional credit refunded to you. That's a significant tax bonus.

Here's how it worked out for the Wards: Over the past few years, the Wards have adopted five children. With each adoption, the Wards were allowed to deduct their qualifying expenses to adopt the children -- the expenses could include reasonable adoption fees, court costs, attorney fees, traveling expenses and other expenses directly related to the adoption. Those expenses can really add up, as the typical private adoption costs about $30,000.

Parents who adopt special needs children may be able to claim the entire credit even if the expenses don't reach the full amount. That worked out nicely for the Wards since all of the children they adopted were special needs -- one has a serious heart condition requiring surgery, and the remainder participate in regular therapy and special classes for learning disabilities.

For nearly 15 years, the adoption tax credit was nonrefundable, so as the Wards have adopted their children, they simply rolled the excess credit to the next year. That all changed in 2010, when the credit became refundable. That meant the Wards could claim their prior year refund credits all at once during this tax season with the exception of one expired credit.

It's a nice windfall for the Wards, though the expenses associated with parenting the children, including repairs to their home, will soon eat away at their refund check.

Other taxpayers may be receiving a similar benefit this year, though admittedly the number of taxpayers who qualify for the credit is limited. However, other refundable credits are still available for 2010. Examples include the Making Work Pay Credit, the earned income tax credit and the first time homebuyer's credit.

While it's not considered a good idea to rely on tax refunds from year to year (it makes much better sense to adjust your withholding so you receive more in your paycheck each month), an unexpected windfall such as the one received by the Wards is certainly a nice surprise.

The Wards had their tax preparer to thank; they weren't even expecting a refund since they didn't know about the change in the law. Clearly, it pays to stay on top of changes in the Tax Code.

Keep reading WalletPop for the latest news. While we can't promise you a $50,000 refund, we can make sure that you know all you need to know to maximize your own tax savings.

[mawilson 2,133]

For a family with 5 special needs children with learning disabilities and a

heart condition, $54,000 really isn't that much, considering it was essentially

a refund of the taxes they paid over the past 15 years.

[Darnell 8,478]

*** Not a Political or Religious Topic, moving to Off Topic Forum ***

[LaL 418]

for real Darnell?

[elmcitymaven 9,712]

Since when is discussion of tax policy not possibly political? Although I'm no longer an organiser (you must have been dancing about with joy when that happened), I would refer you to the rules for organisers. When a topic could fit in either of two fora, the best course of action is to let it remain where it was posted.

I call BS on this move. Indeed, I might go so far to call it a political move, in which case this topic really DOES belong in P&R.

Edited April 11, 2011 by elmcitymaven

[Usui Takumi 1,562]

THREAD MOVING FAIL....

[tweety 1]

Not to sound hateful or anything... but wth... they only make 39k / year and were allowed to adopt 5 kids? Don't the adoption agencies look that the adopting parents can afford their children? Kids are expensive. We have quite a bit more than 39k / year at hand and we do feel a financial pinch from just one baby. I know a lot will say all they need is love, but let me tell you they also need food, clothing and diapers (lots of the latter lol) etc. etc.

So is finances not one of the criteria for adoption? Just curious!