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Category: Due Diligence Requirements for Preparers

Due Diligence Common Errors

The four most common EITC Errors are:

 Qualifying Children - Taxpayers claim a child that does not meet the age, relationship, or residency requirements. (read more)

 Filing Status - Married taxpayers who claim Single or Head of Household filing status. (read more)

 Income Reporting Errors - Taxpayers may sometimes over-report or under-report income to qualify or maximize the amount of EITC.  The most common income errors noted by the IRS are Schedule C's with large losses to bring down income to qualify for EITC, inflated Schedule C income to maximize the amount of EITC and Schedule C's containing no expenses. (read more)

 Incorrect Social Security Numbers - Each taxpayer, spouse and qualifying child must have a valid Social Security Number (SSN) to claim the EITC.  If a taxpayer, spouse or qualifying child's SSN is invalid, missing or does not match the records from the Social Security Administration, the IRS will disallow EITC and send the taxpayer an error notice regarding the SSN error.