It can be challenging for Massachusetts residents to know what credits and deductions they can and cannot take at tax time. One credit that the IRS says many people are missing out on is the earned income tax credit. The agency estimates that one out of every five who qualify for this credit fail to take advantage of it.
So many people are afraid of making mistakes on their income tax returns and being audited that they take the “safe” road. Unfortunately, that often means either paying more in taxes or failing to receive the maximum amount of refund available to them. Some people may also not even think they qualify for the EITC because they did not qualify the previous tax year.
While that may seem like a logical assumption, it may not be true. They need to check from year to year to make sure they are not missing the benefits of this credit. Whether a family qualifies for this credit depends on income, family size and filing status. A year is a long time, and a lot can change. Even if a Massachusetts resident did not qualify for the EITC for the 2018 tax year, it would be worth looking into for the 2019 tax year.
In order to claim this credit, taxpayers must meet certain criteria outlined in the Internal Revenue Code. Because of abuses in the past, the IRS takes more time to review income tax returns claiming the EITC than it used to. If the agency has any doubt that a taxpayer qualifies for this credit, the process will take even longer and could end up resulting in a dispute, which could prove costly to the filer. It would be wise to seek assistance with this and other tax preparation questions to reduce this eventuality.