Tax Refunds/Debt

[tifnglen]

OK

I know alot of people on this board are against tax refunds. But my question is this: Why do you think people get 4-5K from the there tax refund and still are in debt/broke. Heres an example:

A close friend has 2 kids so she gets about 4K back every year. She owes money of bills and has cc debt (about 1K). This year she bought a new bedroom suite for her and her daughter. There was nothing wrong with the old one just 3-4 years old.

So my question is should the IRS pay off all cc debt/collection accounts/loans, etc. before they issue you a check. What do you think.

[Hedy]

Presuming it's a refund of their own money, I think it would be both illegal, as well as immoral, for such restrictions to be placed.

[tifnglen]

well some of it is but the people that have kids get the child tax credit and more credits. its really not money that they earned but i see what you are saying.

[anonymous_saver]

To be honest, I kind of like the idea of the government requiring that you use your tax refund to pay off debt. However, I think if this happened that it should only be allowed to go towards collections accounts and such and not accounts that are in good standing. For example, a person who is paying off their student loans bill every month shouldn't have to pay extra towards it, they should be allowed to use that money as they see fit.

However, if a person has lots of collections on their account, I can understand the argument of getting the money taken out of their tax refund, or through their regular paycheck. I'm not sure how they could rate which accounts should be paid off first, and how much is the max that they could take away from someone though.

Interesting thought.

[sweeps]

One of the problems would be the added bureaucracy of the IRS keeping track of which creditors had a claim on your refund. Also there is the problem of creditors incorrectly (either accidentally or maliciously) reporting information to the IRS. For example, Joe Schmoe gets a hold of your SSN and notifies the IRS that you owe him $5000. Poof, there goes your tax refund and Joe is nowhere to be found.

[tifnglen]

thanks for replying. i know its not likely to happen but i was just tossing around ideas.

[Hot dog]

I know if you owe child support they will take your refund.

[Quynne]

I wouldn't be for that at all. Whatever happened to freedom? People are free to be stupid. lol. I am in debt and get back a sizable return. I don't use it for material impulses. However, I did have to use it to replace two broken windows. I also used to for debt. I will admit that I used a portion or my kids' clothes...not BabyGap etiher. I also used it to buy printer that I needed. I homeschool and do ebay online...so that is something I need. I don't feel bad about any of the purchases I made. It isn't like I bought something I didn't need or went on vacation. However, even if that is what I did...so what? I could less what other people do with their tax return. I will also welcome the fact that I am wrong...that there is a good reason for me to care. But until I can think of a good reason for me to give a hoot about a person in debt using a tax return to buy something.....I say you do what you want with it. Oh...I also used it to pay an extra house payment. Next year we are using it to start an IRA. That isn't debt...at least cc debt...but still I don't feel bad.

[vsjhoc]

Often there is a connection between debt and a large refund.

Theoreticaly, if you were bringing home more money during the year, you could pay your bills instead of going into debt. Too many people get in the habit of letting everything slide for a few months waiting for their refund to pay everything off. The problem with this approach is that the debt is growing due to the interest even if they are not buying anything, while the refund money is static. Of course, some people might change their withholdings, bring more money home, and still incur debt and then have a smaller refund.

[b4freedom]

I don't think the government wants YOU to be financially responsible. If you were financially responsible then the government would have to be too.

Most people are in debt regardless of how much they get.

For example, I know someone with about $30k in credit card debt and even more in other types of debt. He sometimes misses his mortgage payment. What do you think he did with a $25k bonus from his job? Purchased a new boat. He sank it and had to get it pulled out of the water. Now it sits in the driveway needing repairs that he can't afford. But, I overheard him eyeballing a camper.

[cptacek]

Originally Posted by tifnglen

OK
So my question is should the IRS pay off all cc debt/collection accounts/loans, etc. before they issue you a check. What do you think.

I have an idea. Let's give the government ALL of our money and then they can hand it back out to us as we need it / as they see fit. Sort of a "the money goes to those who need it" kind of system. The government can provide us food, and shelter, and even tell us where to work, and all we have to do is let them handle all of our money decisions!

Oh, wait, that's socialism.

[tinapbeana]

if you owe on a federal student loan in default, your refund gets snagged.

basically, basically, if you owe money to the fed (or from a judgement apparently, based on the post re: child support), they'll find a way to get their money.

with that said, i find it sad that my grandfather owed 10 years worth of child support on 3 kids and never actually paid a dime of it...

[anonymous_saver]

"Oh, wait, that's socialism."

OK, that's a bit of an exageration.

[cptacek]

Actually, what I said is socialism.

Here is what wikipedia says (emphasis mine):
Socialism - Wikipedia, the free encyclopedia
Socialism refers to a broad array of doctrines or political movements that envisage a socio-economic system in which property and the distribution of wealth are subject to control by the community.[1] This control may be either direct—exercised through popular collectives such as workers' councils—or indirect—exercised on behalf of the people by the state. As an economic system, socialism is often characterized by state or community ownership of the means of production.

Here is what answers.com says:
socialism: Definition and Much More from Answers.com
Any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy.

Keep looking, you'll find more examples.

The more control the government has over our money, the more socialistic a society we become.

[anonymous_saver]

I'm becoming more socialist every day.