In the United States, hardworking families may qualify for additional financial support through the Earned Income Tax Credit (EITC). However, if the Internal Revenue Service (IRS) audits your EITC claim, it is essential to understand how to respond effectively.
Identifying an EITC Audit
If you receive any of the following IRS notices—CP75, CP75A, CP75D, Letter 566-D, Letter 566-E, Letter 566-S, Letter 525, Letter 692, Letter 3219, or Letter 555—your EITC claim is under review. Taxpayers who have not received these notices but have questions should contact the IRS using the phone number provided in their correspondence.
Understanding EITC Eligibility Requirements
The first step in addressing an EITC audit is confirming whether you meet the necessary criteria. These include:
- Child Eligibility: The child must meet age, relationship, and residency tests for the tax year in question.
- Filing Status: You must qualify as either single, head of household, or married filing jointly.
- Income Limits: Your earned income and adjusted gross income must fall within IRS thresholds.
Gathering Required Documentation
If the IRS requests additional documentation, you may need to provide proof such as:
- Birth certificates for claimed children
- Proof of residency (e.g., school records, medical documents)
- Evidence of relationship (e.g., court orders, adoption papers)
Ensure all documents are accurate and complete to avoid delays or denials.
Responding to an IRS Notice
Carefully review the audit notice, which outlines the IRS’s specific requests and procedures. If you cannot provide the requested documents, contact the IRS immediately for guidance. Maintaining clear communication with the assigned auditor can help expedite the process.
Best Practices During an Audit
- Keep copies of all submitted materials for your records.
- Respond promptly to IRS inquiries to prevent further complications.
- Seek clarification if any part of the audit is unclear.
While the EITC provides valuable financial assistance, ensuring compliance with IRS requirements is critical to avoid penalties or future filing issues.