First of all, no, I didn’t get a tax refund of $54,000. Secondly, no, this wasn’t the tax refund of a millionaire. This refund will be making its way to Smithfield, North Carolina, where David and Thelma Ward will be gladly accepting it.
How in the World?
This article originally posted on CNN Money and was titled, “We’re Getting a $54,000 tax refund!” This couple makes a very modest income each year – typically a little under $40,000. So, here’s where my thoughts lead…. they’re making $40,000, which means that they paid $10,000 in taxes or so (and that includes everything – Federal Tax, State Tax, Medicare, and Social Security). How is it that they can receive more than 5 times the amount that they paid in?
Here’s why they earned as much as they did — they have big hearts! Not literally of course….They run a foster home, and sometimes, their foster kids never find a good home. The solution? Thelma and David often decide to adopt these children – and that’s where the refund comes in.
The tax credit is called, “The Federal Adoption Tax Credit”. It allows a credit of up to $13,170 for each adopted child, and since the Wards have adopted 5 children in the past 3 years, their refund was quite substantial. The adoption credit alone accounted for $45,560, which was obviously the majority of their huge tax refund.
What’s the average tax credit in 2011?
The average tax refund last year was $3,129. Does that seem high to anyone? It sure seems high to me.
I mean, the majority of the population works a job and has no other source of income that they need to file. If they received a $3,000 tax refund last year, that means that they paid in $3,000 too much! Every month, they gave the government $250 that they could have kept! Why woudn’t they make a slight adjustment to their tax forms and keep some of that cash?
Sure, it’s fun getting a big check from the goverment each year, but it’s most definitely not the wise thing to do. Wouldn’t you rather keep your $250 each month and invest it? What are your thoughts?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.