Mathematics Guys Here...

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

1. reckedracingTTIWWOPVIP

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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. Bl6CRXSenior 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^^ Likes Bewbies

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

4. reckedracingTTIWWOPVIP

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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. Bl6CRXSenior 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. MikeBergyBlah blah blah....

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

7. EGProjectYEEEEAAHHHHH

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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. MikeBergyBlah blah blah....

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

9. pills_PMDSuper Moderator

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amen to that brother...

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

10. asmallsolSuper Moderator

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I got a b on my last diff-eq exam I couldn't be happier

11. MikeBergyBlah 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_PMDSuper Moderator

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

13. MikeBergyBlah 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. reckedracingTTIWWOPVIP

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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_PMDSuper 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. MikeBergyBlah 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_PMDSuper Moderator

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

18. MikeBergyBlah 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.

19. pills_PMDSuper Moderator

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