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A Huge Tax Refund of $54,000 This Year


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.


  1. I agree with you. I’m currently paying far too much into my federal taxes but I want to make sure that I owe nothing and when I switch jobs I may be able to be completely exempt from paying and still get a refund. A lot of people end up claiming so many exemptions and owing money but the only problem is that they have none since they spent it all.

    -Ravi Gupta

    • Ravi, I agree with your point. Sometimes people are just terrible savers. This is almost like a forced savings account for them. If they take this money and put it towards their debts or invest it in a retirement account, then I don’t think I would mind so much.

  2. I estimated my tax liability and actually upped the amounts coming out of my paycheck to cover the $$ I would owe from my investment income. This saves me the trouble of filing estimated tax returns every quarter! It does take periodic re-adjustment, but it’s easier for me to do it this way and it avoids me owing the big dollars when I file.

    • You must really be doing well with your investments income! Congratudations! It’s always good to gain an idea of how much you really need to pay the government at the end of the year. If it’s too much or too little, then you can make adjustments before the year-end.

      Thanks for the comment Johannah!

  3. 5 children will cost considerably more then $54K refund over their lifetime! I do not like large refunds because that says I did a poor job estimating my liability. My preference is a few hundred dollar refund!

    • Ha, yeah. I wouldn’t advise going out and adopting children just for a tax refund. But, when you don’t expect much of a refund, and you get $54,000, that’s pretty cool.

  4. I’m happy for the family who got the 54K refund, despite not paying any Federal taxes. Families who adopt are true saints in my eyes, and should get every support possible!

    I like tax refunds b/c I know I’ll have a hard time saving $200-300 a month. It’s more gratifying one lump sum!


    • Tax refunds are great for those that adopt children aren’t they? They really do deserve it.

      It is tough to save money from month to month, I agree. But, if you get one lump-sum, that means that you have missed out on a whole year’s worth of interest! This could mean that you lost $100 throughout the course of the year. I’d rather invest my money wisely throughout the year.

  5. I had a pretty high refund this year, in fact the most Ive ever had by far. I was laid off, then started a new job mid-year…and purchased a home as well. There was a lot there so my tax planning was a bit off…but Im doing my best to improve this year.

    • Sounds like you’re doing it right MoneyIsTheRoot! A positive tax return is fine, but some people pay in as much tax as possible just so they can get a huge return! It simply doesn’t make sense. Nice job making adjustments.

  6. I saw this on CNN. Found it very interesting!

  7. I am not sure that I fully agree with using tax policy in an attempt to influence behavior because of the added complexity to the tax code.

    However in this case, I think that the money spent by the government is worthwhile as giving kids a loving home will benefit society immensely by keeping them out of the child welfare system and possibly through years of increased tax revenues as these kids become productive adults due to the positive influence of a loving family.

    • Certainly, children shouldn’t be adopted in order to get tax credits – it doesn’t make financial sense anyway since children are a very large expense. I think it’s a great benefit to opening up your heart though. I’m glad these folks get their $54,000 refund. They deserve it.

  8. My wife and I are getting a refund, but only because we had to buy an new A/C unit (energy efficient of course) during the summer. Otherwise, I would prefer to break even every year. Unlike many other credits, tax breaks, and entitlements I like the adoption credit. There are so many needy children in our country, and across the world, that it is nice to see them helped out a bit.

    • Great response Financial Knowledge! I don’t mind a minor tax refund, but when you get over $1,000, then there’s some better calculating that could have happened (I do understand your scenario though).

      I don’t mind the adoption tax credit either. There are plenty of kids that really need help from a loving family.

  9. We are getting a large refund because we have three dependents and a low salary currently. As our income improves, I hope to have smaller and smaller refunds. But kudos to the couple adopting 5 kids. They should get some financial incentive because it will cost a lot to raise these kids and they have a much better chance of becoming productive adults when raised by loving parents rather than lingering in the foster care system.

    • Hi Melissa! Based on the growing popularity of your website, I suspect that you won’t have a low income for long! Keep it up!

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