Errors on Claiming EITC on Tax Return

By | February 19, 2014

Errors can delay your refund or we could end up denying your EITC claim. Watch out for these common errors when claiming EITC. Census data indicates that the credit lifted 6.6 million individuals out of poverty in 2009, including more than 3 million children. The EITC lifts more children out of poverty than any other program. It is important to properly claim the EITC on your tax return.


Common Errors on Claiming EITC

Even if someone else prepares the tax return, a taxpayer is still responsible for the accuracy the return. Because the EITC is complex, many people claiming it make mistakes. Taxpayers should get help if they are not sure whether they qualify. Common errors include:

  • Claiming a child who is not a qualifying child,
  • Filing as single or head of household when actually married,
  • Reporting incorrect income or expense amounts, and
  • Missing or incorrect Social Security numbers for self, spouse or qualifying children.


Errors on Claiming EITC on Tax Return

If a taxpayer receives an IRS letter requesting additional information, an immediate response is the best practice to avoid delaying a refund. If help is needed, the taxpayer can call the phone number shown in the letter.

The EITC is sometimes criticized, however, for having a high rate of overpayments. And the EITC does have a significant error rate that needs to be reduced. Some people who claim the EITC either figure it incorrectly or are not eligible. A deliberate error can have lasting impact.


Tax Professionals Preparing EITC and Form 8867

More than half of EITC claims are prepared by tax professionals. To help ensure that only those eligible get the credit and that everyone who is eligible gets the right amount, the IRS requires paid preparers to file Form 8867 with any federal return claiming the EITC. This is the same due diligence checklist that for over a decade preparers were required to use for determining a client’s eligibility and then keep in their records.

Taxpayers should be aware that they are ultimately responsible for all information on their returns, whether choosing self-preparation, seeking volunteer tax assistance or paying a professional to claim the EITC. Beware of scams promising to increase an EITC refund. Creating fictitious qualifying children or inflating income levels to get the maximum EITC are scams that may result in severe penalties. Among other things, a taxpayer could be banned from claiming the credit for up to 10 years. If an EITC claim was reduced or denied after tax year 1996 for any reason other than a mathematical or clerical error, the taxpayer must attach Form 8862, Information To Claim Earned Income Credit After Disallowance, to the next return filed to claim the credit.