Saturday, March 26, 2011

Top 5 Things Wrong with the TAX Code

The Top 5 things Wrong with the TAX Code:

     1. EIC or the Earned Income Credit: this is a credit that lower income people receive as a refund on their taxes, this refund they receive regardless if they pay in any taxes. Most people that receive this Tax credit get thousands of dollars back as a refund and pay no Taxes.-This credit needs to be reduced or eliminated all together. This would save the country millions in revenue if not billions.

     2. Educations Tax credits where do we begin? The education Tax credits are numerous in number. Their is the education expense deduction you take as a reduction to you Adjusted Gross Income (AGI). Then we have the Lifetime Learning Tax credit this credit you receive up to $1500. Then there is the Hope Tax credit : if you are in the first two years of college you can receive a Tax credit up to $2000. Then their is the American Opportunity Credit which basically is a refundable souped up version of the Hope Tax credit. These credits need to be simplified and condensed into one resembling the Lifetime Learning Tax credit.

     3. Charitable Donations on the Schedule A. These should all have to be verified with written proof. Their is rampant abuse of this write-off. I am not against this at all. There just needs to be verifiable proof to back up these claims.

    4. Schedule C. There is much possible abuse associated with this form. Some people could just make up numbers to meet the income eligibility to receive the Earned Income Credit. The I.R.S. should require all Schedule C information to be fully documented to eliminate the abuse of the Schedule. This change could save the country several more millions if no billions in revenue lost.

     5.Claiming of Dependents. The rules for claiming dependents were recently examined and tightened up. Additional monitoring and stricter rules need to be drawn up. There is much abuse reported in this area of claiming dependents on the persons return in the family who would benefit most with a large refund, instead of the person who should by the Tax Code be claiming them.

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