EITC Special (February 2013)
Roberg Tax Solutions is offering a limited time, special deal on tax returns with an Earned Income Tax Credit.
This special price is only available to the first 200 people who make an appointment for this special offer, and is limited to February 1, 2013 – February 28, 2013.
For this time, we will offer our full service tax preparation services to our wage earning EITC clients for $200; that includes the cost of a bank product and all state returns. A bank product means that we take your payment out of your tax refund. You may either have your refund direct deposited into your bank account, or we can print a check in our office for you to pick up later. This works out to be a $50 to $75 savings off of our regular price depending upon your tax return.
This is a great savings from those other big ticket tax companies.
If you are self employed, for this special offer, we will prepare your EITC tax return for $350 including a bank product. That’s a $150 savings off of our regular price.
We do not provide Refund Anticipation Loans—that is, we don’t do fast refund money. Your refund will come after the IRS funds the money to the bank which generally is expected to take 21 days. If you have had problems with other people claiming your children on tax returns, this could take as long as 75 days.
What are the rules? You must legally be able to qualify for the Earned Income Tax Credit and you must provide the necessary documents that are required in the new IRS regulations. We will be making copies of all of your documents and we are required by law to hold copies of those documents for three years.
You will need to bring the following paperwork with you to your appointment:
- Social security cards for every person listed on your tax return
- 1099-MISC forms
- Any other income documentation
- Proof of your child’s residency such as recent school report cards or medical statements
- Proof of self employment income (if relevant)
- Driver’s license or other state issued photo ID
For more information on documentation, read our post about the new EITC rules: http://robergtaxsolutions.com/2012/11/what%e2%80%99s-new-with-the-earned-income-tax-credit-you-need-to-know-this/
This offer is limited to persons who can come to our office in person. We will not do EITC returns over the internet. (Sorry.)
If we discover that you are not eligible to claim an Earned Income Tax Credit, we will return your paperwork and you will be under no obligation to file your tax return with Roberg Tax Solutions. Of course, if you still choose to file with us, we’ll be happy to have you as a regular client—in which we have another offer for you on our special offers tab.
If you’ve been filing your tax returns with some cattle call tax office that treats you like a number instead of a person, maybe it’s time to try something different.
Call today to set up your appointment. (314) 275-9160 or visit www.robergtaxsolutions.
***Roberg Tax Solutions EITC Tax Return Special Offer***
The short answer is no. But I’ve had about 10 phone calls or emails this week with this question, or something similar anyway, so I figured I should post something about it so people will understand it better.
First, EIC stands for the Earned Income Credit (or some people call it EITC for Earned Income Tax Credit, they’re the same thing.) The key phrase here is “Earned Income”. You earn income from a job—like working at Target, or you might be self employed like me. I own my business so I don’t get a W2 but I still earn income.
Social security, welfare, child support, food stamps, VA benefits, SSI, and gifts from friends or family—none of those count as earned income. Neither does bank interest, stock sales or dividends, or rental income. As far as the IRS is concerned, these things do not count as “earned income” for EIC. (I know those Smith Barney commercials say they “earn” their income, but if you’re making money in a Smith Barney account—it doesn’t get you anything for EIC either.)
Alimony—does count as earned income for EIC. Don’t confuse child support with alimony. Child support ends when your kids grow up. Alimony lasts forever or has an end date that has nothing to do with children. Most people get child support, alimony is pretty rare these days.
So if you have a job that gives you a W2—you’re set because the W2 proves your income. If you get alimony, that’s proven by your ex claiming the alimony expense on his tax return. But if you’re self employed—proving your income is harder.
This year, the IRS is demanding that tax preparers have proof of your self-employment income before we can file your EIC tax return. We’ll be fined $500 per return for not having that information. So if you don’t have good records of your income, you might get turned away by your tax preparer.
So the obvious question is—what records do you need to prove your income? The IRS has a list that includes the following: a business license, 1099MISC forms, records of gross receipts, income summary, expense summary, and bank statements.
The 1099MISC is really the best proof of income if you receive those. 1099MISC is given to anyone performing work for a small business that got paid over $600 during the year. If you’re like me, you don’t get 1099MISC forms. Most of the work I do is for individual people, not businesses so I need to prove my income another way. But I’m an accountant—I have all the bank statements and business records and a license to back up my income. It’s what I do for a living. Not everyone is going to have my kind of records.
What do you do if you just clean Mrs. Jones’ house for $50 a week? Or, maybe you helped paint Mr. Anderson’s garage for $200 last spring. It’s all cash, you’re just helping out. Those don’t seem like they’re really jobs but they are. If Mrs. Jones gives you $50 a week for the whole year, then that’s $2,600. Add Mr. Anderson’s $200 and you’ve got $2800. It’s not much but it’s something.
If you’ve been doing odd jobs like that, you’ll need to get some kind of documentation. Put it in writing and have the people you worked for sign it. In the future, you should keep a log of every place you work: the date, the location, the person you worked for, and the type of work you did.
You can’t make stuff up! That’s illegal. And remember, EIC returns with self-employment are an audit target—if you lie about this stuff there’s a really good chance that you’ll get caught.
But, if you really did work and you really do deserve to claim EIC, then you should be claiming it. You just need to make sure that you’ve got your documentation in order so you can prove it.
The IRS has a website full of information about EIC. Check it out: http://www.irs.gov/Individuals/EITC-Home-Page–It%E2%80%99s-easier-than-ever-to-find-out-if-you-qualify-for-EITC
Some people honestly don’t know who does and who does not count as a qualifying child for EIC and they mess it up. But one of the most common types of EIC fraud is someone claiming a child that does not belong on his income tax return. If you make an honest mistake, the IRS agent is probably going to assume you’re committing fraud anyway. So I’m here to keep you out of trouble.
I come from one of those families where we use phrases like, “first cousin once removed.” When I was a child I remember going to a wedding reception and playing all evening with my “cousin”, only to be told later that she wasn’t a cousin, she was my “father’s half-brother’s step daughter.” (Yeah, do the calculation, in any normal family your uncle’s kid is a cousin, right?)
I married into a family that is “we’re all one big happy”. We don’t have steps, or in-laws, or halfs, we’re all brother, sister, mom, cousin, etc. I think most people are somewhere in between. But what we’re dealing with today is the IRS version of family and the IRS version of family goes like this:
Let’s start with you. You are the center of the universe and all family members revolve around you. What we’re trying to figure out here is what counts as a Qualifying Child for you—this eliminates all parents and grandparents and members of their generation.
You may count your brothers and sisters. You must be older than your brother or sister to claim them (unless they are physically or mentally disabled.) You can also include step brothers and
sisters, and half brothers and sisters, and adopted brothers and sisters.
A step sibling means that your parent married somebody else who had kids. There is no blood relation, but there is a marriage license. If your parent did not marry the other person, even though you all live together and think of yourself as one family unit, there is no IRS relationship.
A half sibling means that one of your parents had a child with someone other than your birth mother or father. Let’s say your mom had you and then left your dad for someone else and had a child—that child is your half sibling—you two share half of a gene pool. The counts with the IRS.
Adopted siblings are just that—they’re adopted. There will be court records showing that they were adopted and part of your family. Adopted children are always treated like natural born children for IRS purposes.
These people are all on your even level of the family tree. Imagine you’re standing there with your arms straight out with your brothers and sisters side by side—this is your generation.
Down below your generation is your son, daughter, step child, foster child or a descendent of any of them, for example grandchildren or great grandchildren. Additionally, any descendents of your generation—those are your nieces and nephews (or great nieces and nephews.) So let’s say your half brother adopts a child and he dies and you’re raising that child—that counts as your qualifying child for EIC purposes because he is your nephew.
A foster child is a child who has been placed by an authorized placement agency in your home or by a judgment or decree or court order. No matter what, a foster child has some legal paperwork involved. If your neighbor runs off and leaves her kid behind and you wind up raising her, she doesn’t count as a foster child until the courts come in and say she’s a foster child. This is one of the most common mistakes people make—claiming children they’re taking care of as foster children without the court documents to back it up. Without that legal piece of paper, the child is not a foster child.
Cousins are never qualifying children for EIC purposes.
Filed under: Earned Income Credit, Self Employed, Small Business
Now some people may be wondering, “Why would I want to prove I have more income than I have to?” But for many small business owners, that’s exactly the problem—you have income, you want to report it to the IRS, and you’re having a hard time proving it. This post is for you.
The number two reason for reporting your non-1099 income (number one of course being basic honesty) is qualifying for the Earned Income Tax Credit. 2011 sort of hit small business owners who normally qualify for EIC with a one-two punch. We had the new 1099 reporting requirements that upped the ante for so many businesses, and we had the new EIC tax preparer due diligence rules with one of the questions being “Do you have forms 1099-MISC to support the income?” With the next question being, “If not, is it reasonable that the business type would not receive Form 1099-MISC?” Here’s a clue: if you answered NO to the first one, you have to answer YES to the second.
So what types of businesses wouldn’t normally receive a 1099? Bunches of them! Face it, if you’re reading this—I’m guessing that your business doesn’t receive 1099s. Generally, it’s reasonable to expect that anybody who works for other people, as opposed to other businesses, would not receive a 1099. House cleaners, dog walkers, handymen, lawn mowing services, daycare providers, interior decorators, and even income tax preparers are all types of business that could easily never see a 1099. (Yeah, me too! Although I’m now getting 1099k forms because I take credit cards, I don’t get 1099-MISC for preparing personal tax returns. Maybe I’ll see some 1099-MISC forms from some of my business clients this year, but I never used to get them in the past.)
So, how does a small time personal service provider prove his or her income to the IRS? There are a couple of things you can do. I’m going to start with my favorite: the business bank account. This is what I do and several of my clients do it too. (Okay, because I’m their accountant and this is what I tell them to do.) Get an Employer Identification Number (EIN) for your business and set up a separate bank account for your business in your business name. Only business income goes in, only business expenses go out. You may have to put some of your own money in for a start up, and once you’re making money you’ll take out a draw, but you’ll label those as such. Other than those two items, your business checking account is pretty much your profit and loss statement as well. Now for a bigger company that would be over simplifying things, but for us little folks–I’m spot on. See this post for more information about getting an EIN number: Free EIN
Why does this make good proof? Because you’ve got a monthly record of your income and expenses. I also have deposit slips to back it up: Mary Jones paid me $200, Fred Smith paid $250. It’s a good solid audit trail. Here’s another post about bookkeeping and your business bank account: Banking and Bookkeeping
But what if you don’t have a separate account? Maybe your business is just too small to bother with the expense of an extra account. What if you’ve just got something really simple like watching the little neighbor kid for a couple of hours after school every day. There’s no contract, no business cards, no advertising. You get $100 a week from your neighbor friend. She pays you in cash—it never sees the inside of a bank because that’s your grocery money. It’s not much but it supplements your child support. How do you prove that kind of income?
The easiest way to prove your income if you provided child care is to have the person you provided it for claim your services on their tax return. You make them a daycare receipt, just like the ones regular day cares do showing the name of the child, how much they paid you and your EIN number. (You can use your social security number but I never recommend that. You can get an EIN number for free. Protect yourself.) This is doubly good because the IRS will get confirmation of your income from an outside source. You prove income, your customer gets a tax deduction, it’s a win/win situation.
But what if your business isn’t day care? What if you did something like mow lawns around the neighborhood and shoveled snow in the winter? Nobody’s going to be claiming you on their tax return, what can you do? In your case, I like receipt books. You can find different kinds at Office Max or any office supply store. I like the ones with a carbon copy—one for you, one for your customer.
Now if you have just one customer and you’re always going to the same place—you can just use the little one that just has a couple of lines and the amount on it. You might write, “Mowing, Mr. Jones, $30, 5/15/2012” on it. You know what you did, who you did it for, how much you got paid, and when. If you have multiple customers you’ll want the larger receipt books that include the address and phone number of the customer. If you do different types of jobs for different people, you might need the bigger ones so you can write down the type of work that you did for them as well.
You don’t have to have a 1099-MISC to prove your income to the IRS. You just need to have a system in place to document your income and you’ll be fine.
It’s that time of year and we’re getting bombarded with questions about the Earned Income Tax Credit. Here’s some of the most popular questions and where to get the answers you need.
My ex has custody of my kids, but the divorce decree says that I get to claim the exemption. My ex says that she gets to because she has custody. I don’t get it, what should we do?
You’re in a situation where you “split” the exemption. Here’s information about how to do that legally: http://robergtaxsolutions.com/2011/11/split-exemption-claiming-one-child-on-two-tax-returns-%E2%80%94-the-legal-way/
According to my divorce decree, I’m supposed to claim the exemption for my child but my ex claimed her anyway. Should I send a copy of the decree to the IRS or the judge?
I’m not an attorney so I can’t give legal advice, but this post has information on IRS rules and court ordered exemptions: http://robergtaxsolutions.com/2012/01/court-ordered-exemptions-and-the-irs/
My child’s daddy is out of the picture. My boyfriend has been living with us for three years now and he’s the primary support for my child. Can my boyfriend claim may child on his tax return because it will give us a bigger refund?
No. And here’s all the reasons why: http://robergtaxsolutions.com/2012/01/can-my-boyfriend-claim-my-child-by-a-different-father-on-his-tax-return-for-the-earned-income-credit/
I went to file my taxes and they got rejected. The IRS says that somebody else used my children’s social security numbers on their tax return. What do I do now?
Basically, you’re going to paper file your tax return. Here’s more information: http://robergtaxsolutions.com/2011/01/my-ex-claimed-my-kid-now-what-do-i-do/
What do I need to do to qualify for the Earned Income Credit?
There are some basic rules that anybody claiming EIC will have to meet, like having a valid Social Security number for one thing. Here’s a list of the rules: http://robergtaxsolutions.com/2011/12/eight-basic-rules-to-qualify-for-the-earned-income-tax-credit/
What if I need more information?
The IRS has the EITC home page. (EIC and EITC are the same thing; earned income credit = earned income tax credit.) They have lots of worksheets to help you determine if you qualify for EIC if your children qualify, and where to get help preparing your return. Here’s the link: http://www.irs.gov/individuals/article/0,,id=96406,00.html
Now if you can’t find the answer you’re looking for, you can always call the IRS – their phone number is 1 (800) 829-1040. Their phones have been slammed lately so you may be on hold for awhile. A few tips: call early in the morning – like 7 am, or later in the day – like after 6pm. And it’s better to call later in the week; Monday’s the worst day to call the IRS. Please be patient and kind to the IRS agent that is answering your question – they have special rules and procedures they are required to follow.
Can My Boyfriend Claim My Child by a Different Father on His Tax Return for the Earned Income Credit?
Short answer: No.
Long answer: Noooooooooooooo! Sorry about the bad joke. But really, no he can’t and here’s why:
First, and most importantly, it’s against the law. Seriously – claiming a child that you don’t have a right to claim on your tax return is income tax fraud and that’s a federal crime.
But how would he get caught? Good question. The most likely way he’d get caught is if someone else tried to claim your child on their tax return, like the child’s real father or a grandparent. Someone might have a problem with you or him and turn you in to the IRS. It’s one of the most common questions I see on the internet: “How do I turn someone in?” I’ve worked on a couple of cases where an older child has accidentally turned someone in by filing paperwork for school which somehow got into IRS records. You don’t want to take the risk.
But the most dangerous person as far as your boyfriend is concerned is you. Let’s say you decide to let your boyfriend claim your child and claim the EIC tax credit because it works out to be more money if he does it. You’re breaking the law too, but when push comes to shove you can break into tears and say he forced you etc., etc. It’s not against the law to not claim your child on your tax return, and proving that you “conspired” with him to commit tax fraud would be hard to do. So let’s say that the boyfriend dumps you and goes out and buys a nice engagement ring for his new girlfriend with that tax refund. I’m guessing that would make you hopping mad, right? Furious! You want to get even, don’t you? What better way to get even with that scumbag than to report him to the IRS. You see why he should be afraid? Very afraid!
So what could happen to my boyfriend if he did get caught? The maximum EIC for one child is $3050 ($5036 for two, and $5,666 for three.) First, he’d have to pay that back. Let’s say we’re just talking about one child, he’ll have to pay back $3050 right off the bat. Then he’d also have to refund the $1,000 child tax credit, so now we’re up to $4050. Now he’ll also have lost the head of household status which gave him a lower tax rate plus he’s lost the exemption so we’re looking at maybe $5,000 (or more if we’re talking about more children). Then the IRS will tack on fines, another 25% or $1250 for late payment fees, and most likely another 20% or $1,000 for under-reporter penalties so you’re looking at about $7250 in taxes owed. Ouch!
It’s also possible that he could be criminally prosecuted. Personally, I have never worked an EIC case that has gone on to the criminal division, but it does happen. What good is your boyfriend to you if he’s sitting in jail?
Don’t create problems for yourself by committing tax fraud. It seems like easy money and the temptation is great. You probably even know people who’ve done it and never had any problems. But if you want to feel safe and secure and get a good night’s sleep, file a correct and proper tax return.
You may also be interested in these posts:
My Ex Claimed My Kid: Now What Do I Do?
Eight Basic Rules to Qualify for the Earned Income Tax Credit
Note: We try to answer all the questions that come to us but please be patient. It’s our busy season right now. We may not get to your post until the weekend. When you make a post and use the capcha code, it won’t immediately show up. You see, for every normal person like you that posts, there’s about three advertisements for things your mother wouldn’t approve of. (We try to keep this a G rated website.) We have to edit those out. If you need an answer right away, here are some links that might help:
How to find free tax preparers: http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers
How to find your local IRS office: http://www.irs.gov/uac/Contact-Your-Local-IRS-Office-1
If you want to hire us, please call (314) 275-9160 or email us. We do prepare returns for people all over the country (and a few foreign countries as well.) We are sorry but we cannot prepare an EIC return for someone outside of the St. Louis area because of the due diligence requirements.