Low income tax credit

income tax credit. I have heard in the past that people have been getting large refunds. But that sounds fishy. I have a friend that had a girl friend that would get about 5600.00 back a year she was told for 1 kid. She use to have two, but he grew and moved out.

You're talking about the Earned Income Credit (EIC), also called Earned Income Tax Credit (EITC). Here are a couple of links for detailed information.

Bob Sandler

You are right that it "sounds fishy". It is one of the most fraud ridden programs in the Federal Government.

Low income wage earner with qualifying child receiving large refund from EIC may be disagreeable to some, may be subject to fraud, but, on its face, doesn't sound fishy.

I disagree. Given the tax scams out there, the EITC SHOULD sound fishy to an alert person. Investigation will show, however, that in many cases it is legit.

IRS is spending large $$$ i) to educate the public and educate the tax preparer community about EIC, and ii) to audit EIC filers.

Don't let your sense of right and wrong override the fact that the law establishes EIC and keeps increasing the income limits and the EIC amounts each year. Two years ago, renewed last December, the law increased this credit based on three children.

Congress has created the EIC as the largest single source of federal funds for low income working taxpayers, especially those with children at home.

And Congress has decided to administer this program through the IRS rather than through other administration departments, such as Dept of Agriculture or Dept of Health and Human Services which also administer programs for low income taxpayers, especially those with children.

As a tax preparer, it is my job to correctly prepare a tax return including, if appropriate, EIC, and not to ask why is there such a program or to criticize the lawmakers for creating it or the IRS for trying to fairly administer it.

job security?

I'm not. But ther are plenty of tax scams out there. Anyone hearing of the EITC should be as sceptical as they should be of the tax scams - they both should, at first blush, smell fishy.

Then, investigation will show exactly what the EITC is and is not. Just because something smells fishy doesn't mean it is.

The opposite of what I am saying would be trust anyone telling you about free money from the IRS, even the tax scams.

Beware, investigate, go forward with the legit, cast aside the scams.

Oh, you mean like the oil depletion allowance, interest deductions for a second home, earned income taxed at capital gain rates for hedge fund managers, farm subsidies and the military spending billions of dollars on equipment they don't want or need and doesn't work particularly well. Yeah, there's a lot of that kind of thing around.

Thanks for the reply guys. I though that there was more to it.

What are the possible scams with regards to EITC?

Careful, this could turn into a flame war.

False electronically filed returns.

Just Google EIC and fraud to find the scams. The IRS estimates that about

This article lists some of them: