earned income tax credit?

Question

why do some "taxpayers" (i use that word generously) believe that they may manipulate or outright be dishonest in order to receive a refund they may not otherwise be entitled to. take the case of two single parents with one child living in the same home, and the taxpayers or tax preparer "belief" that either parent is entitled to take the child's dependency exemption and associated child tax credit "type" benefits, while the tax code and regulations specifically state who must take the exemption and who may be able to take the eitc. and this is not up to anyone to manipulate or bend the rules in order to fraudently receive a earned income tax credit that they are not entitled to. do people really think they will get away with this or are they living in a fantasy world.

Answer 1

I'm not sure how easy it is for two people to try to claim the same child. Now that the IRS requires the SS # of the child you are claiming, don't they cross check these numbers to see if the dependent has already been claimed by someone? If not, they should. A simple computer program could cross check SS #s.

It hasn't been all that long ago that one needed only list the names of the children being claimed on the return. Anybody could list any number of children on their return. Now, they require the SS#. What's the point if they're not checking the accuracy of them?

Answer 2

This isn't manipulation - assuming the two people are both the biological parents of the child, since both meet the qualifications to claim the child as a qualifying child, they are allowed to choose who takes the esxemption and the associated benefits only one of them can take them). See page 28 of IRS Publication 17, in the section "Special Test for Qualifying Chilfd of More Than One Person".

The tax preparer's "belief" here is correct. They aren't "getting away with" something, they're following the law. Why are you so bent out of shape about it?

If you are referring to the tiebreaker rules for who gets the exemption, they don't apply here.

Just as an extra note - the IRS is looking closely at EIC claims this year, and is catching many that are claimed without basis.

Answer 3

I'll give you a better example: Mr & Mrs C have 4 kids. Mr C earns $22K and Mrs C earns $28K. They SHOULD file MFJ claiming 4 kids and pay no income tax and get no EIC. Instead, one files as Single with 2 kids and the other files HOH with 2 kids. Both then get EIC for several thousand dollars in addition to not paying any income tax.

Fair? NO, Legal? HELL NO. But people do it all the time. Until the welfare programs get away from the IRS jursidiction, there's no way to adequately stop this trash from happening.

Also, the potential benefit far outweighs the risk to this couple. If they don't get caught, it's $3K more to spend this year. If they do get caught, well, shame on them. They don't get the $4K. Go to jail? Are you kidding....not enough enforcement to ever do that!

--A Damn Fine Tax Advisor

Answer 4

Actually, due to changes in the IRS rules, either parent can claim the child, regardless of income, but that parent has to claim the child for everything. So if they get a bigger refund because parent A claims the child, then they can do that. If both parents live in the same household and they both claim the child, the parent with the higher income wins.

Answer 5

Now that the definition of a dependent has changed taxpayers can not double dip on the EIC.

Answer 6

As a tax preparer, I see it all. People who get mad at me because they have 3 kids and didn't get EIC. They think it is automatic or something. Or those who get mad if they didn't get at least $3K refund back. I try to explain that they are letting Uncle Sam borrow THEIR money interest free but these people rely on these huge refunds are their yearly savings to buy big ticket items.