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Mathematics Guys Here...

Discussion in 'Members' Lounge' started by reckedracing, Mar 31, 2006.

  1. reckedracing

    reckedracing TTIWWOP VIP

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    ok...
    not sure how much background you want before the equations...
    you would think the less income you have the less tax you pay equaling a greater refund
    well the EIC - earned income credit throws a wrench in this formula

    i've done 2 returns today that could potentially have Huge sch c losses...
    but a sch c loss = no EIC
    so it was actually in the clients favor to show a reasonable income from Sch c business to get the largest refund from the EIC

    now my tax software isn't designed to determine what income gets the most refund
    i've determined some formulas based on a particular clients info as the EIC is a table and flucuates based on filing status and # of children etc...

    so here it is
    EIC = Earned Income Credit
    EIC,A = Earned Income Credit Amount (the number you enter into the IRS table)
    I - Schedule C Income
    SET = Self Employment Tax 15.3%


    Refund = EIC - SET

    EIC = EIC,A * .40

    EIC,A = I - (.5 SET)

    SET = I * .153

    .5SET = I * .0765

    can anyone figure this out?
     
  2. Bl6CRX

    Bl6CRX Senior Member

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    Using your equations, here's what I come up with:

    Since you are reporting "I" either with a loss or "I" without a loss, you'll need two more I variables.

    I=Schedule C Income
    IL= Schedule C Income loss
    IN=Schedule C Income with out loss.

    So then I=IN-IL

    So you want to know when:

    Refund with loss>Refund without loss.

    Step 1: Set them up using the equations.

    I*.153>.4[IN-.5(INx.153)]

    Step 2: Simplify

    .153I>.4IN-.0306IN
    .153I>.3694IN

    So here you could simply plug in I and IN and compare to see which is the greater refund. But if you want them in terms of one another, you have to keep going.

    Step 3: Use "I=IN-IL" to write the equations in terms of IN

    .153I>.3694(I+IL)
    .4142I>I+IL
    -IL=.5858I

    So then, it would be in one's favor to recognize their schedule c losses if they were greater than approximately 58.58% (some rounding error here) of their schedule c income.
     
  3. George777

    George777 ^^ Likes Bewbies

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    It's all greek to me...Turbo Tax FTW
     
  4. reckedracing

    reckedracing TTIWWOP VIP

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    hmm, i think i didn't explain it well enough

    i need to report schedule C without a loss in order to get the EIC
    the person needs to show income to get the EIC

    but i'm trying to find out how much income has to be reported to maximize the refund...

    the max EIC is 4400 at an income of 11000
    an income of 13155 gives an EIC of 4400

    Income * .9235 = Taxable SE Earnings
    Taxable SE Earnings * SE Rate of .153
    13155*.9235 = 12149
    12149 * .153 = SE tax of 1859

    4400-1859 = refund of 2725

    I know this can be made into a differential? equation
    but i've been at work for about 12 hours and the last math class i took was about 5 years ago
    lol
    i just can't wrap my mind around it this late in the day

    i ended up plugging figures to find the approx max refund
    and i know if i increase the expenses by 15 bucks i could get 2 or 3 bucks more for the refund
    i just wish i knew the exact optmization...
    this is more of a personal experiment, not so much for work...

    but the underlying theory here that completely BLOWS my mind is that if you have a personal business LOSS you get jack shit for a refund, but if you MAKE money you get money from the IRS...
    that makes NO FUCKING sense at all...
    except they are rewarding people with children that get off their ass and work...
     
  5. Bl6CRX

    Bl6CRX Senior Member

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    I think I get what you want, I'll take another look at it tommorow. I actually haven't had that much math, just through calc, but I do a fair amount of optimization problems as an econ major. Im also doing a minor in accounting, but I haven't taken any tax classes yet, so I don't have a good understanding of the law behind this. What I'm trying to say with this tired babble is that i'll give her another shot, but someone else may be better suited for this.
     
  6. MikeBergy

    MikeBergy Blah blah blah....

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    I deal with lift and drag coefficients, not tax and money problems. Sorry.
     
  7. EGProject

    EGProject YEEEEAAHHHHH

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    Yeah, I got a C+ in Mircoecon and I never want to see anything like that again.


    Need a 50kg block moved up an inclined plane with a static friction coefficient of .5 Mu - then I'm your guy.
     
  8. MikeBergy

    MikeBergy Blah blah blah....

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    lol. statics > econ. For that matter.... diff eqs > econ.
     
  9. pills_PMD

    pills_PMD Super Moderator

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    amen to that brother...

    appilcations of differential equations to diffusion and mass transport gets even worse
     
  10. asmallsol

    asmallsol Super Moderator

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    I got a b on my last diff-eq exam :) I couldn't be happier
     
  11. MikeBergy

    MikeBergy Blah blah blah....

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    I looked at that and for a second thought "what do diff eqs have to do with public transportation and the road systems" lol.
     
  12. pills_PMD

    pills_PMD Super Moderator

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    word... i'm a materials student.. i deal with kinetics and diffusion (interstitials, vacancy etc)
     
  13. MikeBergy

    MikeBergy Blah blah blah....

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    yuck

    <===End user. i.e. Aero. Trying to get my senior project done so it's official.

    Recked, you ever get your stuff worked out?
     
  14. reckedracing

    reckedracing TTIWWOP VIP

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    nope, just too burned out to formulate it

    the really shitty part is that the constants change for any given client...
    so even if i got a formula i would have to alter it for every client depending on their marital/filing status and how many chillens they have...

    trial and error for now...

    i hate dealing with personal taxes
    people are such a pain in the ass
    i like corp taxes... in and out, nice and easy and pays better too
     
  15. pills_PMD

    pills_PMD Super Moderator

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    why yuck?

    i actually just finished my b.s. and am a phd student now. i'm working on an aerospace related project.
    friction stir processing of titanium alloys. what is your project on?
     
  16. MikeBergy

    MikeBergy Blah blah blah....

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    I'm not into micro-type things. I like to see the macroscopic effects. Diffusion, microscopic mass transport properties is not my forte...

    As for the senior project. Writing a VB program to simulate/compare a theoretical inter-turbine stage combustion chamber performance with that from a conventional afterburner on an F110 type military turbofan. A few engine companies may actually be considering building prototypes of these systems in the near future, so I may get a supercool job from this project. I have never been a great student (study habits never developed, lol) so projects like this really get me going. I'm also doing a maritime surveillance UAV platform design, but that is just for fun. What I am designing...
     
  17. pills_PMD

    pills_PMD Super Moderator

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    oh snap! you're an AIAA member?? so am I.
    do you ever participate in the student conferences??
     
  18. MikeBergy

    MikeBergy Blah blah blah....

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    I've submitted my letter of intent for the undergraduate individual aircraft design RFP this year. I was a member on the winning undergrad engine design team from last year. Heck Yes, that is me, third from the top! Was also on an ug aircraft design team last year, but we placed an unofficial 4th behind all the other 3 Cal Poly design teams. I never participated in any conferences.

    Sorry for the thread jacking btw. [​IMG]
     
  19. pills_PMD

    pills_PMD Super Moderator

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  20. phunky.buddha

    phunky.buddha Admin with a big stick Admin VIP

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