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Will Earned Income Tax Credit claims result in an IRS audit?

For most people, filing taxes is a frustrating technicality each year with the potential benefit of a refund check. However, for a small percentage of people, tax season doesn't just culminate in the acceptance of your tax return. It results in a pending audit.

Few things in life are as stressful and terrifying as the process of getting audited by the IRS. Are they reviewing this year, or several previous years, too? What kind of financial records are you going to need to provide? No matter your income or your risk level, if you are facing an IRS audit, you want the advice and help of an experienced tax and audit attorney.

While those with higher incomes may expect greater scrutiny, many times those targeted for audits actually have lower-than-average incomes. In order to curtail abuse of certain financial benefits, such as the popular Earned Income Tax Credit (EITC), the IRS has specific auditing and qualification processes to ensure that Earned Income Tax Credits are not abused by those seeking to take advantage of this particular credit.

While you obviously want the maximum return possible, it's important to realize that claiming the EITC could increase your chances of an IRS audit for this past tax year.

What are the qualifications for the EITC?

One of the main reasons the IRS focuses on this and other tax credits is that some people are confused about what the qualifications for the EITC really are. If you claimed the credit but are now facing an audit and aren't sure if you should have, it is relatively simple to discover if you made a mistake when filing.

Qualifications for the EITC include being a legal citizen or resident alien with income in the last year, having a Social Security Number for yourself, your spouse and any qualifying children, and meeting specific income requirements as well.

One of the income requirements is that income from investments must not exceed $3,400. As to overall income, those claiming the EITC must have an income that doesn't exceed specific levels, such as $14,820 if no child is claimed or $39,131 for a single parent with one child. Any children claimed should live with you for at least half the year. Divorced parents often have clauses in their divorce decree that indicate who is allowed to claim the children for tax purposes.

An attorney can help simplify the audit process

There are other red flags for audits, including self-employment write-offs and high levels of charitable contributions in any given year. Whatever your risk factors were, if you are facing an audit of your tax records, you need legal support you can trust. Speak with an experienced financial law and tax attorney as soon as possible. Your attorney can help you gather records, correct any errors, and prepare for the audit itself. You will be grateful for the assistance when you have to face the IRS.

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