Tax Question - Earned Income Credit Overpayment?

Question

My wife and I filed our taxes with the 1040 form. We dropped this information off to our tax consultants. When we picked it up they told us we are getting $4870 back. Yesterday I was filing and I noticed that she left out a W2 for $10,775. I checked online and the EIC should have been $2219. That is a $2,651 difference. We already received our return and spent it. I am very concerned because we dont have the money to replace this. I was wondering what the IRS usually does in this siutation. I was told that sometimes they will just take it out of next years return. Can some please help me answer this question?

Answer 1

The tax consultant should be responsible for the mistake. Go back to them and have them rectify the situation. It might mean repaying the over-payment, true, but the IRS is good about payment plans.

Answer 2

Who is "she" -- your wife or the tax consultant? If it was your wife, then of course the consultant is not responsible. In any event, if more tax is due or the refund was excessive, you spent the money and you are responsible to repay it. However, if the consultant made a mistake and you owe penalties, then I would think the consultant would be responsible, at least to the extent of the fee you paid for preparation.



As indicated in other answers, you may be able to get the IRS to agree to allow you to pay any tax due in installments. The matching program will catch up with you, so start saving for it now.

Answer 3

Take all the information you have back to the preparer ask them to prepare an ameneded return for you, there will be a balance owing also ask the preparer to file a payemtn schedule for for you and make sure you make the payments when you file your return next year if you still owe them they will take the amount of next years return. Irs will not pick up on this mistake for 3 years but htey would and then you would owe penalties and interest.

Answer 4

You do not have to worry that your EITC will be taken away for a mathematical error. Make sure that the refund you received was in fact more than it should have been. Lots of times the IRS computers correct math errors. It is possible that your refund check was $144 less than you had shown on your tax return. If your check was actually larger than it should have been, filing an amendment is the correct way to proceed.

Answer 5

You can call the IRS and set up payments with them, that's even if they notice the mistake, the right thing to do would be contact them. Because what if they just spring it on you next year and want a payment in full. I would contact them and try and see what's going on and set up payments.