An Reason To File Taxes

In the past weeks, this forum saw a couple of lively and humorous threads about income taxes. As a public service, I want to mention a government program that might act as a carrot for more people to file an income tax return.

Please note I believe that everyone should comply with the law, no matter what we think about income taxes. To affect change, use the ballot box and/or write your Congresswoman/man.

The earned income credit is available to single people who have adjusted gross income below $13,460 if you have no kids, or about $35k-$43k if you have a qualifying child. Slightly higher limits apply if you are married and file a joint return.

A qualifying child is, generally, one that is related to you, under 19 at the end of the year (or 24 if they're a full time student), any age if permanently and totally disabled, and must live with you in the USA for at least half the year.

If the above describes your situation, you may be leaving legitimate government help on the table by not filing tax returns. The earned income credit is designed to help people who make an effort to work, and still need an extra boost with the cost of raising kids.

The bottom line point here is that an income tax refund normally must be claimed by 3 years after the April 15 when the return was actually due. So, generally speaking, the window to claim a refund for 2007 closes on April 18, 2011. In general, the way to claim a refund is to file a true, complete and correct return.

This is a very broad and general discussion of the earned income credit and the statute of limitations to file a tax return and claim a refund. It is intended to be strictly informational, and not to constitute income tax advice. There may be income tax provisions, limitations, and exclusions not covered here that may or may not apply in your particular situation. Please find an income tax adviser in your local area to find out what you need to do with regard to filing your taxes, and complying with the law.

Yes, I drafted and proofread this message for 30 minutes. But I forgot the subject line!

Glad to see that the accountants have extra time on their hands.

Excellent writeup and agree that not filing for most folks is leaving money on the table.

There are 2 items that I wish to caution on in filing a return. Failing to file a return is normally a minor slap on the wrist. Filing a false return for multiple years is much more serious. IRS computers identify returns where the income reported is less than expenses or are less than it takes to live. So, come as close as you can to preparing a complete and accurate reurn. Oh and if you need a profession for the return, consultant seems to work well.

Ok, back to doing tax returns.

In 22 years of doing tax returns I never had any of my clients get audited for suspicion of low income. To many government assistance programs to help people with living assistance. Also I guess staying at Alcatraz for tax evasion could be consider a slap on the wrist. Al Capone was sentenced to Alcatraz in 1929 for tax evasion.

Also not mentioned, there is a refundable child credit for those who have children 16 and under up to $1,000 per child. The maximum EIC for 2010 is $5,666

Porscheboy: No matter how busy, exercising the verbal side of my brain (vs simply numbers) feels good this time of year. I agree about filing a truthful return. That can't be stressed enough.

i812: Indeed, suspicion of low income doesn't usually draw an audit. The IRS tried "lifestyle audits" about 18-20 years ago. They were so controversial they must've been dropped.
In recent remarks circulated on an IRS email list in the last day or two, the Commissioner of Internal Revenue repeated the fact that IRS "scores" returns on a statistical basis. This is a huge factor in who is selected for examination.

My friend and I discussed the "registration fee", the other day and told me that a person who has no earned income but no tax return for the maintenance can be based on the money they have received aid.