taxes

Proof needed to claim earned income credit

Judy O'ConnorDear Tax Talk,
Is it necessary to provide documents showing your qualifying dependent child lived with you for six or more months when filing your taxes? Or is this only necessary if the IRS asks you to submit these if you're audited? I had a tax preparer ask me to prove this for 2013, but I have been claiming my dependent on my taxes ever since he was born.
-- Bryan

Dear Tax Talk,
I was told that I have to show proof of my son living with me when I always claim him on my taxes. I have a lease that mentions everyone in the house. Is that good enough proof to show he lives with me? Or do I have to get a school letter?
-- Michele

Dear Bryan and Michele,
Thanks for this great question. The answer is yes, you need to provide the documentation if you used a paid preparer for your tax return and you claimed the earned income credit.

The earned income credit is for certain people who work and have earned income less than $51,567. The IRS requires paid preparers of federal income tax returns involving the earned income credit to meet the due diligence requirement in determining the taxpayer's eligibility for, and the amount of, the earned income credit. The preparer is required to complete Form 8867 Paid Preparer's Earned Income Credit Checklist and it is submitted with the tax return. Preparers are required to ask for certain documents that they rely on to determine the taxpayer's eligibility for the earned income credit and to also keep copies of those documents as part of their records. Failure to document the eligibility could result in a $500 penalty for each failure. So, while it may seem unusual to you, it seems your preparer is just doing what the IRS requires.

Michele -- Here are the records that can be submitted to your paid preparer to document the residency of qualifying children for the earned income credit:

  • School records or statement.
  • Landlord or property management statement.
  • Health provider statement.
  • Medical records.
  • Child care provided records.
  • Placement agency statement.
  • Social service records or statement.
  • Place of worship statement.
  • Indian tribal official statement.
  • Employer statement.
  • And last, but not least, "other."

So as you can see, yes, your lease should be enough documentation.

Thank you for the question.

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