Posted on January 27, 2012January 14, 2017 by Jan Roberg

EIC Help Page

EIC help - questions and answers

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:

Split Exemptions

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: Court Ordered Exemptions

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: Boyfriend Can’t Claim Exemptions

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: My Ex Claimed My Kid

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: Rules For Qualifying for EIC

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: EIC Help

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.

Posted on January 6, 2012January 13, 2017 by Jan Roberg

Can My Boyfriend Claim My Child by a Different Father on His Tax Return for the Earned Income Credit?

A boyfriend cannot claim your child for EIC.

No matter how good a “Daddy” is, the IRS has very strict rules about who can claim the EIC tax credit.

Short answer: No. Do not let your boyfriend claim your child that is not his for the Earned Income Tax Credit.

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

_______________________________________________________________________

If you need an answer right away, here are some links that might help.

Answers to EIC Questions

How to find free tax preparers

How to find your local IRS office

Posted on December 30, 2011May 31, 2016 by Jan Roberg

Eight Basic Rules to Qualify for the Earned Income Tax Credit

Photo by Stuart Richards on flickr.com

To qualify for Earned Income Tax Credit or EITC, you and your spouse (if you’re married and filing a joint return) must meet all of the following rules:

You must have a valid Social Security Number. [If you are foreign born and have an ITIN number, you cannot get an earned income credit, but if you become a citizen and obtain a social security number, you may go back up to three years and amend your old returns using your social security number to qualify for EIC.]
You must have earned income from employment, self-employment or another source. [Alimony counts as earned income, child support does not. Social security, pension payments, and veteran’s benefits do not count as earned income.]
You cannot use the married, filing separate status to file your return. [If you are separated and have been living apart for the last six months of the year, you may be able to use the head of household filing status and still qualify for EIC. Do not claim head of household status if you are still living with your spouse. That’s a form of EIC fraud and can get you into big trouble.]
You must either be a U.S. citizen or resident alien all year or a nonresident alien married to a U.S. citizen or resident alien and choose to file a joint return and be treated as a resident alien. [If you are in the US military and stationed out of the country on active duty, you still count as being in the United States for EIC purposes.]
You cannot be the qualifying child of another person. [Let’s say you are a young mother still in school and living with your parents. If your parents can claim you as a dependent on their tax return, then you cannot claim an earned income credit for your child. You will be able to allow your parents to claim your baby as a dependent on their tax return though.]
You cannot file a Form 2555 or 2555-EZ (related to foreign earned income). [Basically, if you’re using this tax form, you’re living and working outside the country so you wouldn’t qualify to claim EIC anyway.]
Your Adjusted Gross Income and earned income must meet the limits shown for 2011:
Earned Income and adjusted gross income (AGI) must each be less than:
- $43,998 ($49,078 married filing jointly) with three or more qualifying children
- $40,964 ($46,044 married filing jointly) with two qualifying children
- $36,052 ($41,132 married filing jointly) with one qualifying child
- $13,660 ($18,740 married filing jointly) with no qualifying children
Your investment income must meet or be less than $3,150 for 2011. [Investment income is basically bank interest, capital gains or dividends from stocks. You might have a partnership interest or own a corporation and receive investment income there. These types of income can prevent you from claiming an Earned Income credit.]

Those are the basic rules that everyone must meet to qualify for an Earned Income Credit. If you have children or are self-employed, you have more hoops to jump through.

Other posts that might interest you are Tax Tips for Single Moms: http://robergtaxsolutions.com/2011/01/tax-tips-for-single-moms/

And also My Ex Claimed My Kid: http://robergtaxsolutions.com/2011/01/my-ex-claimed-my-kid-now-what-do-i-do/

Posted on January 31, 2011May 31, 2016 by Jan Roberg

My Ex Claimed My Kid: Now What Do I Do?

What to do if an ex spouse claims your chlid for taxes

It’s a hassle if someone else claims your child on their tax return, but that doesn’t mean you have to give up.

This happens to people all the time. You go to electronically file your tax return and it gets rejected because someone else has already claimed your child. What do you do? I say fight back, and here’s how.

The first step to fighting back is to make sure that you’re in the right. Ask yourself these questions:

1. Are you the biological parent of the child? Hint: if your answer is “I’ve raised her like my own.” You’re going to have trouble winning. If you’re a grandparent, step parent, aunt or uncle; and the person who claimed the child is the actual parent, you don’t stand much of a chance. (That said, some folks will have a credible case, but I’d suggest professional help here because it is tricky.) To go this route you should be the real parent.

2. Did the child live with you all year? If not all year, for at least over half of the year? If you had custody all year you have a much better shot of winning. You absolutely must have had custody for over half of the year to even think of trying this. If you’re on the border line, where your ex had the child for half the year and you had half, this might not be worth it.

3. Is this good for your child? Generally you’d think that having more money in the household would be good for your child, but if fighting with your ex could cause harm to your child, you might want to stop and think about it a bit.

Step two. Once you’ve determined that you are in the right and that you are entitled to claim your child, then what you need to do is print out, sign and mail that rejected return to the IRS —keeping your child as your dependent on the tax return. When you do this, the IRS has to take it in. They have to look at it and it’s going to throw whoever claimed your child into an audit. If an Earned Income Tax Credit is involved then those audit papers generally run 11 to 22 pages long. (11 pages for a straight EIC audit, 22 for an EIC and head of household audit, they’re the same questions it’s just that 22 pages is more intimidating.)

Here’s the scary part, you’re going to get the same paperwork. It is a little intimidating, but you’re expecting it. Because you’re the custodial parent, that is your child lives with you, you can answer those questions with no problem. People who shouldn’t be claiming your kids can’t answer the questions and that’s why you’ll win. If your kids are in school, you’ll need a document from the school saying they attend and where they live. If they’re too young for school, you can get a statement from the doctor’s office that you’re their parent and you pay their medical bills. You’ll have the resources to prove that you’re the parent.

If you’re reading this and thinking, “I can’t prove I have custody of my kids,” then maybe you shouldn’t be filing for them. You will have to provide some proof: school records, doctor’s files, church documents, day care receipts, health insurance records, something professional. Your Mom or a friend can’t vouch for you.

Once you’ve received the audit papers, completed them and sent them back, then it’s a waiting game. Your ex (or whoever claimed your child) will have to complete the same paperwork. The IRS will examine the papers and determine who had the proper right to claim your child. But since it’s you, you will win.

The big downside to this is that it will take months to settle. Months. On the upside, once your ex has lost an audit case for claiming your child, it will be very difficult to ever try it again. You’re not just solving a problem for one year, you’re preventing future problems as well.

What if you need the money now? That’s the most common question. Sorry, but that’s impossible. What you’ve lost, you can’t get back without a fight. If you have more than one child, and only one was claimed incorrectly, you could file now and at least get part of your refund, then file an amended return later. I don’t recommend doing that, but I also understand sometimes you need the cash now.

If you try doing this as an amended return there are two consequences: first, it will slow everything down even more. You can’t file an amended return until your first return is completely processed. An amended return will take about 16 weeks to run through the system before the whole audit process begins so you’re basically adding 4 to 5 months to the timeline for solving this issue. Second, filing a return and amending to add a child reduces your credibility with the IRS. Your documentation had better be rock solid because you will have no wiggle room for doubt if you submit an amended return to claim your child.

One more thing to consider before you go through with this. Call your ex and talk it out. I’m not crazy, hear me out. You’ve read this far, you know that fighting is a big hassle. Before you go into warrior mode, maybe you can negotiate a peace treaty. What do you stand to gain from this? What does your ex stand to gain? It’s important that you file your returns legally, but with divorced or never married couples, you can split an exemption: the custodial parent claims head of household and EIC, the non-custodial parent claims the child tax credit and the exemption. It could be a good thing for both of you and for your child. (Remember, what’s best for the child?) Instead of going to war, you have your ex amend his/her return and you file your return right after the amendment is accepted. It still is slow, but much faster than going through an audit. And it’s a peaceful solution. (Please, don’t even think of trying this if your ex is dangerous. Safety first.)

Finding out that someone else has claimed your child for taxes can be shocking and financially devastating. The assumption is usually that it’s the ex, but that’s not always the case. When you file to claim your child, you will never be told who the other person is. (Of course, if it’s your ex you’ll probably get an unfriendly phone call so you’ll know.) It’s scary how often it’s not the ex, though. Be sure to protect your child’s social security number. Don’t keep the card in your purse. Don’t share the social security number with anyone. Your child needs your protection. It’s hard enough being a kid, being a kid with a stolen identity is worse.

_______________________________________________________________________

Note: Here are some links that might help:

EIC questions of any kind: http://www.irs.gov/Individuals/Earned-Income-Tax-Credit-(EITC)-%E2%80%93–Use-the-EITC-Assistant-to-Find-Out-if-You-Should-Claim-it.

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

Posted on January 28, 2011May 31, 2016 by Jan Roberg

EITC Awareness Day: A Contrary View

January 28, is EITC Awareness Day. EITC is the Earned Income Tax Credit. To find out if you might qualify for and Earned Income Tax Credit, you can go to the IRS website and check out the EITC Assistant. It basically asks you questions and helps you figure out if you can get and Earned Income credit or not. The site is: http://apps.irs.gov/app/eitc2010/SetLanguage.do?lang=en

Last year, the IRS handed out $58 billion in Earned Income Tax Credits. It’s estimated that only four out of every five people who qualify for an earned income credit actually claim it. Some of the underserved categories of people who missed their EITC (also called EIC) are small business owners and farmers. If you have self employment income, that still qualifies you for EIC.

Another category of people who missed their EIC claims are grandparents who have custody of their grandchildren. It seems that a few years back, when the IRS tightened up the rules about grandparents claiming their grandchildren there was the mistaken thought that grandparents could never claim their grandchildren. That’s not the case. If your grandchildren live with you, be sure to check the EITC eligibility page to see if you might qualify.

Okay, the IRS asked me to plug EIC today and that was the plug. Here’s my side of the story. As a tax professional, all year long I have heard what I consider to be veiled threats from the IRS to tax pros around the country about EIC. They can come to our office at any time, pull our files and inspect to see that we’ve completed the proper due diligence on all of our clients. The PTIN registration, which quite frankly only covers us “good guys who follow the rules” will be used to monitor our returns. If one of our clients files a fraudulent EIC claim, the IRS can then pull all tax returns that have our PTIN number to check for fraud as well.

Now I shouldn’t complain. I don’t file very many EIC returns anyway and the ones that I do file, I’ve done the due diligence. I have my paperwork in order so it wouldn’t be a problem if the IRS did an EIC audit of my office. But I guess I’m just a little shocked that the IRS wants me, or anyone for that matter, to promote EIC.

Here’s why I’m shocked: of the $58 billion dollars that was handed out last year, the IRS estimates that $13 to $16 billion of that was erroneous payments. Now let’s be realistic honest mistakes do happen, but a pretty fair chunk of that change is due to downright fraud. We’re talking roughly 25% of the EIC claims are wrong. That’s one in four EIC claims. ONE IN FOUR!

Back in the old days, I used to do EIC audit work for a large tax company. Many of the audit clients didn’t have their taxes done by one of our preparers, we were just the best place to go to once they got the audit letter. Some of the “fly by night” operators who prepare those “erroneous” EIC returns disappear after April 15^th and some vanish even sooner than that. I learned a lot from that experience about what not to claim on a tax return. Maybe this can help someone else.

Do not submit a tax return claiming head of household status if you have been incarcerated for the entire year. Generally head of household status means that your children are living with you and most prison wardens don’t let you keep your kids with you overnight. It’s estimated that 4 to 5 thousand fraudulent EIC returns were submitted from prisons last year. Currently, the IRS does not have access to prison records so they can’t immediately identify those returns.

Do not submit a tax return claiming head of household status if you are in a nursing home. Kind of like prison, the nurses don’t let you keep the grandkids overnight either.

Do not claim your live-in underage girlfriend as your “qualified child”. (And please, there are just some things I don’t want to know.)

Head of Household status is a confusing designation. According to IRS rules, a head of household is someone who is not married that is providing over half of the support for another person, usually a child, but it can be a parent, grandparent, or even a friend that lives with you. You can’t claim head of household if someone else is supporting you. Here’s a hint, if you only made $3,000 last year, you didn’t make enough money to support anybody. Don’t claim head of household. Its fine to claim single, and claim your child as a dependent and you’ll still qualify for EIC. But if you claim head of household, it gets your tax return looked at even if it doesn’t change your refund.

Do not claim your neighbor’s child on your tax return no matter how often she sleeps over and eats at your house. The child is not yours and she doesn’t really live with you—it just feels like it.

Do not make up a fake business to claim income for the EIC. If you have a real business, bring your receipt books and your expense ledger with you to your appointment. The IRS is on to that. Professional preparers are now required to look at your books and see some type of evidence that your business is legitimate.

And finally, do not claim a child on your tax return just to make life difficult for your ex. If you have a legitimate claim, that’s one thing, but if you don’t and you’re just trying to punish someone, don’t go there. It will land you in a heap of trouble that’s not easy to crawl out of.