Earned Income Credit

Make sure you have bookkeeping notes, receipts, bank statement, etc. to prove this income. Are you claiming dependents that you haven’t previously reported on your tax return? Be sure you can demonstrate that the dependent resided with you and you cared for the for six months to one year. The IRS will request the dependent’s school records, utility bills, medical records, etc. in an audit/examination. If you cannot prove that you were entitled to claim these dependents, the IRS can ban you from claiming the Earned Income Tax Credit (EITC) for two years. The EITC is the biggest refund generator. Being banned means your refund for the next two years could be reduced by thousands.