It’s something that I really enjoy. I always enjoy helping people get their finances on track / understand their finances better. I find it very rewarding. People make better decisions when they are better informed, and I like being a part of helping them be better informed.
My site asks all preparers to pass the Advanced Certification exam, although they are somewhat unusual. I have a friend who only takes the Basic Certification each year at her site. I think you need Advanced certification to handle self-employment, which is pretty common among low-income folks. There’s probably a few other scenarios that require Advanced certification, but I don’t precisely recall. There’s also special certification for Military (which we never ever get because I think they can get their taxes done at the VA for free by people who do nothing but military returns) and Puerto Rico returns and international returns (neither of which we ever get either, but we do always have one preparer certified in each just in case).
I will say that it’s strengthened my pre-existing distaste for tax-prep software. We always end up amending a few erroneous TurboTax returns each year. Like I had one gal whose TurboTax return was rejected by the IRS, so she came to us. She had like $15,000 of Schedule C self-employment income and no self-employment tax, which is obviously why the IRS rejected the return. She was disappointed that she was only getting a $12,000 refund instead of the $14,000 refund TurboTax had calculated. But at least she actually got the $12,000 refund when we did her taxes. I also pointed out that she was eligible to deduct some expenses that she hadn’t taken when she self-prepared using TurboTax. She had an intense fear of the IRS, and I had to explain that no one was going to come arrest her in the middle of the night for claiming business miles when she was a home health worker and legitimately driving to her clients’ homes. So her income (and therefore her SE tax) was a little lower when I calculated it too. I also got her to deduct PPE supplies she’d purchased, which she was also afraid to do.
AND she said that she’d start logging her miles and her PPE purchases so she’d have better records next year. (We were literally using our smart phones to go on Walgreens’ website and price out masks and gloves.) Win!
What you’ve done is shown what might be accomplished in an ideal scenario for a person trying to move from poverty to just getting by,
You’re assuming that the person is both motivated to go through multiple government hoops and red tape, while adding the burden of an additional child to make a few extra bucks as well as find government section 8 housing that is both available and in a place where they can live and possibly work.
I question why this hyper motivated theoretical individual is so motivated to navigate the government bureaucracy to get to a standard that is little above the poverty line but isn’t able navigate the real world economy to find a job that pays a living wage.
I think I agree with Twig’s policy constraint, though for a slightly different reason.
Regardless of the incentive issue, doesn’t it make sense to limit the possible government cash that is contingent on having kids to no more than the cost of kids? If you want to give people more assistance than that, the extra shouldn’t require having kids (UBI?). Even if nobody is actually incentivized to have kids no matter how large the check from the government, it’s still just unfair to hand out excessive tax dollars to just parents of minor kids.
I will confess that I was the most confused about Section 8 housing, so if I made a mistake, that’s probably where I made it.
It’s set up so that people don’t have to pay more than 30% of their income in rent, which would limit this gal to $600 a month. Since I calculated a benefit of $400, I must have assumed that the rent was $1,000, and then I probably forgot that I’d used $1,000 for the section 8 and used $900 for the SNAP.
I honestly don’t recall precisely.
If you think my Section 8 number needs revision then you might be right. It’s a doozy of a program if you want to actually understand the numbers rather than just apply and hope for the best.
Using reconciliation sounds like the kind of thing that Manchin would oppose on principle, even if he was completely on board with the merits of the bill.
Interesting. So it sounds like in Alaska this person might not qualify for SNAP or, given AK prices maybe they would if I kept the $24K income. Everything is a lot more expensive in Alaska. The whole analysis would fall apart in AK as the average cost of raising a child also wouldn’t be reasonable for AK. You’d have to develop different assumptions. But if you add in an average permanent fund dividend that’ll add the to benefits of having a kid.
I was aiming for something a little more average than Alaska. Not crazy expensive, not the Po.
My best guess at how to interpret the link I posted was the way I did it (other than switching from $1000 to $900) was that I was doing it right. But perhaps not.
I certainly made a good-faith effort to get accurate numbers. And having spent the majority of my adult life in OR, that was the state I looked at.
I don’t doubt this. My thought is that this is all very complicated and the programs interact in a way that results in overstating assistance when stacking them.
I also still take issue with counting child support as part of the “profit”. I know that many times it’s mandated, but there are plenty of cases where a family is receiving some sort of outside support from family members (diapers, clothing, etc.) and including child support like it’s substantially different feels wrong to me. I get that you’re looking at the bottom line, but it doesn’t feel right to me.
That link says the voucher amount is not “income”.
This link from PA (like Dara’s) says it is not “expense” either.
I don’t think you can assume this person gets both Section 8 and an “excess shelter expense” bonus in SNAP.
Third party and/or vendor payments that are payments for shelter costs directly paid to the landlord or utility by someone outside the household is not an allowable shelter expense. 560.8 Shelter/Utility Deduction
The question is “Is the increased cost of housing related to having a child more or less than the increased gov’t benefit?”. There are many individual circumstances.
Suppose the parent had been sharing a two bedroom with a friend and paying $660/mo in rent. After the child, she moves to her own apt and pays $1,060/mo. Then, Section 8 caps her rent at 30% of her income or $660. In that case, the extra cost exactly matches the extra gov’t benefit. But, we can come up with many different examples.
Note that Section 8 has it’s own problems. * * *
The Housing Choice Voucher program is the nation’s largest housing subsidy, serving 2.2 million families, which is still only about 25 percent of eligible households.
The article talks about multiple ways the program doesn’t live up to expectations
I will reiterate that there is an assumption about the excess housing expense baked into the “expense of raising a child” calculation.
If you want to knock out either Section 8 housing or SNAP altogether then after the American Families Plan is implemented the hypothetical mother is still better off financially with the kid than without. The difference was over $6,000 counting the full amounts for both Section 8 and SNAP, both of which are less than the difference.
I certainly think she’d qualify for one or the other.
I feel like you’re moving goal posts considering your first example only included the programs available now, excluding the possible effect of AFP in the future, and now you’re adding in an estimate for AFP.
Do you agree that people are likely not profiting from having a child TODAY?