I was shocked to learn that beginning January 1, 2011, my taxes (and yours too if you have kids) are going to increase dramatically. I found this out yesterday when I opened an e-mail from Daily Worth. This is a free newsletter I signed up for about a month ago, and because I found the news so incredible, I double checked it with the IRS website. And, yes, it’s true!
There are two ways that families are going to get screwed taxed next year.
Day Care Credit
Per Daily Worth:
The child and dependent care tax credit will drop in 2011—from $3,000 in day care expenses for one child, $6,000 for two (up to 35% of costs), down to $2,400 and $4,800 respectively, with a 30% cap.
Child Tax Credit
Per Daily Worth:
…the child tax credit is being cut from $1,000 to $500.
For our family, this will mean a tax hike of $2,240. Each year. This is not an increase in the amount of income that will be subject to taxing, but an additional dollar amount we will have to pay.
That is a significant hit on any of the things we would like to provide for our children… college savings and fees for sports teams will be hit the hardest.
I don’t understand how our government thinks that this is the right thing to do. We just spent $787 BILLION dollars to stimulate the economy in 2009. Now a year later, we are taking a good chunk of that money back – but just from families raising children?
Per the Census Bureau and 2004 numbers, there are 85 Million children in the United States. Not even considering the tax hike due to reduced day care credit, each family will have to pay $500 more per child. That is $42.5 Billion Dollars PER YEAR paid by working families toward the debt that was created by bailing out banks and car manufacturers from their poor financial choices. Does that seem right?
To put this into perspective, the total stimulous money sent to individuals (via the Social Security Administration) was only $14.5 billion. Working families are going to have to pay 300% of that back in 2011! Not just 300% of the amount they received, but 300% of the amount everyone in the country received.
I can’t imagine that any economist that thought providing $787 billion to stimulate our economy in 2009 was a good idea, would turn around and support increasing taxes on working families with children in 2011.
I hope that our newly elected officials will take note of this disparity. If you agree, please spread the word and let’s bring it to the attention of our senators and congressmen.