Avoiding IRS Tax Debt: Don’t Depend on Those Kids as Dependants

What's the most common cause of tax debt? One of the most common causes of tax debt is from people claiming dependants for Earned Income Credit. Mostly these are people with lower income who are just looking for a little extra to get by. A lot of these people get bad advice from friends, family, or tax preparation companies. Or they're people who took care of a child that wasn't theirs out of the goodness in their heart. Even as an IRS agent I felt bad for these people. But they made the mistake of listening to bad advice.

If it's too good to be true... This small error in judgment can result in a tax debt of several thousand dollars that you can't afford. A good rule of thumb when filing your taxes is that if you have any doubts as to whether you can claim a deduction, you probably shouldn't. We always watched for Earned Income Credit claims because they were easy money. Do the research to make sure you know the requirements and see if you actually meet them.

Who can I claim as a dependant? The best resource tool for you is the IRS itself. You can find the rules for Earned Income Credit spelled out in a simple manner by going to www.irs.gov/eitc.

Here is a brief list of the requirements for Earned Income Credit in brief that can be helpful in finding out if you qualify or not.

If you're married, living together, and the child is the biological offspring of both parents, then there shouldn't be any problem with receiving earned income credit.

To claim a child, that child must meet the relationship, age, and residency tests.

  1. Relationship: Son, daughter, stepchild, eligible foster child, or a descendant of any of them (for example, your grandchild), or brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew).
  2. Age: The child must be under the age of 19, or under the age of 26 and a full-time student, or permanantly and totally disabled regardless of age.
  3. Residency: The child must have been in your care at least six months of the tax year.
  4. Only one person can claim the child.

If your situation doesn't meet these basic requirements, then claiming a child for Earned Income Credit would only result in a bad situation for you.

Now you have the smoking gun... Use it!

I'm Richard Close and I was a "HitMan" for the IRS. I was a second generation revenue officer. I took out anyone who owed the IRS money as my father had before me. Now I help thousands of Americans beat Uncle Sam and save thousands of dollars. Tax problems? Contact me and get free tips and techniques to deal with wage and bank seizures and slash tax debt: email me at IRS-Hitman@taxdefensenetwork.com or call 1-888-391-2037. Follow me on Twitter @irs_hitman.

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