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Earned Income Tax Credits are computed on INCOME TAXES. Not F.I.C.A taxes.

Your link is to THE OPINIONS and interpretations of the contributors on that site. They are wrong.

EITC is computed on the amount of income vs the number of children. The amount of FICA paid is NOT part of the equation. The EITC could be 250% of FICA tax paid. And it could be 15% of FICA tax paid.

I AGREE that EITC, "effectively" reimburses many for all of their FICA taxes paid, but that is not the purpose, nor is FICA tax part of the equation for the EITC refund.

3 things,
1. We agree a person could pay $2657.00 in FICA taxes, and get an EITC refund of $4593.? No connection between the figures.

2. The $4593. refund was computed on the monies earned, the INCOME TAX withheld, and the number of children. FICA amounts were not figured into that computation.

3. IF EITC was a reimbursement of FICA tax, then the person receiving the EITC would get no credit for amounts paid toward his retirement benefit.

EITC IS an effective reimbursement of FICA taxes, but not an ACTUAL reimbursement of FICA taxes. But they certainly ARE getting back MORE than they paid in.

 

And both are based on income.

One is the IRS official website.

"EITC Home Page--It’s easier than ever to find out if you qualify for EITC

EITC, the Earned Income Tax Credit, sometimes called EIC is a tax credit to help you keep more of what you earned. It is a refundable federal income tax credit for low to moderate income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit."

http://www.irs.gov/Individuals/EITC-Home-Page--It%E2%80%99s-easier-than-ever-to-find-out-if-you-qualify-for-EITC

I'm sorry you guys don't seem to know much about the EITC, it is WHY it was created in the first place, to offset FICA taxes the poor paid.

I know exactly how it is computed and it doesn't matter.

It does so as it is intended to do from it's inception and continuing through it's expansion.

Even the Socialist know this

"Christine Scott
Specialist in Social Policy

The Earned Income Tax Credit (EITC or EIC) began in 1975 as a temporary program to return a portion of the Social Security tax paid by lower income taxpayers, and was made permanent in 1978. In the 1990s, the program became a major component of federal efforts to reduce poverty, and is now the largest anti-poverty cash entitlement program. Childless adults in 2008 (the latest year for which data are available) received an average EITC of $252, families with one child received an average EITC of $1,996, and families with two or more children received an average EITC of $3,105."
http://economic-legislation.blogspot.com/2011/01/earned-income-tax-credit-eitc-overview.html

How about some payroll tax experts?

"[h=2]Earned Income Credit Infromation[/h][h=1]Understanding the Earned Income Credit[/h]What is the Earned Income Credit (EIC)?
The EIC is a tax credit provided to help offset the basic living expenses (including FICA taxes) of low income employees.

Who is eligible for the EIC?"
http://www.payroll-taxes.com/articles/211-the-earned-income-credit.htm

From the 1995 Congressional hearings

"If you take the Social Security taxes that are attributable to a worker — that is the employer and the employee portion — and attribute that, you will find that the EITC offsets Social Security taxes as well as the income taxes with respect to working families. "

"Second, if you wish to keep the program as part of the tax system, consider replacing much of it with a payroll tax exemption on
a flat amount of wages. As you well know, the EITC originated, in part, as an effort to rebate to low-income workers the payroll taxes collected from them. Instead of collecting those payroll taxes and then trying to return those amounts to workers, in the form of an EITC payment, it would make much more sense simply to refrain from collecting the payroll taxes in the first place. Further compli- ance could be expected to be very high. "http://www.archive.org/stream/earnedincometaxc00unit/earnedincometaxc00unit_djvu.txt

 

EITC WORKS like a FICA tax reimbursement program, but it is NOT a FICA tax reimbursement program. "Help offset," does not mean reimbursement. I'm in total agreement with you in principle, but not in the facts.

 

YES IT IS, it was the purpose of it's founding and continues to be the primary purpose, you are arguing with the Congress and the IRS. You are trying to make a distinction without merit. What don't you understand

to rebate to low-income workers the payroll taxes collected from them.

From the Department of the Treasury

"The Earned Income Tax Credit (EITC) is a refundable Federal income tax credit for low- to moderate-income working individuals and families. Congress originally approved the tax credit
legislation in 1975 in part to offset the burden of Social Security taxes and to provide an
incentive to work."
http://www.treasury.gov/tigta/auditreports/2011reports/201140023fr.pdf

 

offset
n [ˈɒfˌsɛt]
1. something that counterbalances or compensates for something else.

re·im·burse (rm-bûrs)
tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es
1. To repay (money spent); refund.

INCOME TAXES, plus a formula according to income and children, are reimbursed through EITC.

Yes, that does OFFSET the amounts paid into FICA, but it is not a reimbursement of those amounts. The FICA taxes collected STAY in the Social Security Trust Fund. The EITC credit is drawn from the general fund. If FICA taxes were refunded, the person would be losing their future SS benefits.

The net effect is the same, we're just arguing over the technicalities.

They end up paying NO federal taxes and finish with money in hand that they didn't earn, but I did. Lets leave it with the part where we agree.