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Leading into this tax filing season I
had the benefit to attend several IRS webinars specifically
for tax preparers. The IRS provided specific details and
requirement information on a variety of topics. One that
stands out is that of selecting the correct tax payer filing
status. Rightly so, as millions of dollars in tax revenue is
lost to the IRS due to incorrect filing statuses.
Specifically, from those who incorrectly claim dependents
and/or file under the wrong tax designation.
Beware, that the IRS is not taking
these losses lying down. Coming into the 2011 tax season the
IRS is now raising penalties not only for the tax payer, but
also for tax preparer. These preparer penalties are not only
monetary, up to $500 per incident, but can include that a
tax preparer who repeatedly selects the wrong filing status
lose the ability to hold IRS credentials to work as a paid
tax preparer.
Head of Household with dependents
filing status is being scrutinized even more, because in
many cases this filing status pays out more in the coveted
Earned Income Tax Credit also known as EITC or EIC which is
a tax credit for people who have low to moderate earned
income. The earned income can be from working for your
employer, yourself or from other sources such as certain
disability income.
Qualifying EIC limits for 2011 include
maximum credits of:
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$5,751 with three or more qualifying children
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$5,112 with two qualifying children
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$3,094 with one qualifying child
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$464 with no
qualifying children
With these types of cash payouts it’s
not hard to understand why the IRS is looking step up
enforcement efforts and penalties for failure to select your
proper filing status and dependent eligibility. While Head
of Household is the most prestigious for receiving the EITC
all tax filing statuses are eligible as long as they meet
the requirements. To find out all the qualifying EITC
details go to
www.IRS.gov and search for EITC.
Don’t red flag your tax account to the
IRS. When in doubt always seek advice of a qualified tax
advisor. For questions and assistance in filing your 2011
tax return contact Focus on Finance directly at
513-341-5912. With over 25 years of experience we are
positioned to correctly prepare your tax return in a
professional manner. Let us help you get personal with your
finances in 2012.
© 2012 Ask Yvon
is a written by S. Yvon Harper for Focus on Finance, LLC -
(513)341-5912. All rights reserved. Contact for questions at
www.FocusOnFinanceOnline.com. Join
us on Facebook at www.Facebook.com/FocusOnFinance.
Readers are strongly urged to consult with a qualified legal
or tax advisor to analyze your specific financial situation
before application of any advice from this column.
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