Don’t Be Offended If Your Tax Preparer Asks You Additional Questions This Year

Important Tax FYI for taxpayers claiming either the Earned Income Tax Credit, Child Tax Credit or Education Credit beginning for tax year 2016: The IRS is requiring tax preparers to perform additional due diligence for all 3 of those items by asking more questions and requesting additional documentation, or be faced with substantial penalties. In addition, refunds from those returns won’t be released until after February 15, and won’t be direct-deposited until the week of February 27.

Why the additional work and hassle? Refundable Credits (a tax credit where you get a refund above and beyond what you paid) are a hotbed for fraud and errors: In 2015 alone, $15.6 BILLION in refundable credits were INCORRECTLY paid out, of which 24% was for the Earned Income Tax Credit alone. That being said, the IRS wants to make sure that those credits are awarded to those who are legitimately entitled to them.

 

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