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Avoiding state tax audits when using the earned income tax credit

On Behalf of | Feb 20, 2019 | Tax Controversies

For some Massachusetts residents, earning enough money to live on can present a challenge. For this reason, the state, like the federal government, provides eligible taxpayers with the opportunity to take advantage of certain tax breaks, including the earned income tax credit. However, if filers are not careful, they could risk tax audits through misuse or mistaken use of this option.

Most of the people who qualify to use the EITC have children, if that helps allude to the requirements to use this credit. To simplify the process, the state of Massachusetts uses the same criteria as the IRS does for federal income tax returns. The state also matches the percentage allowed by the federal government as well.

Eligibility largely hinges on the amount of money earned throughout the year, marital status and the number of children claimed. Children must be under the age of 19, unless they attend college, in which case they must be under the age of 24. If a child suffers from a qualifying disability, age will probably not matter.

Once income reaches a certain level, the EITC is no longer available. If a filer does not have children, this credit may still be available based on income, but the amount may be small. Hundreds of thousands of the state’s residents use this credit each year.

Taxpayers need to pay particular attention to the criteria for this credit or they could risk tax audits at both the state and federal level. Avoiding the eventuality would be preferable, which could happen with some assistance. However, if it is too late for that, legal help with an audit could prove invaluable.

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