The economy is still suffering, people are struggling, and often people are just barely covering their bills. But, as one single mother recently learned, you’d better be sure that you are making ends meet. If not, the IRS is going to catch you.
Via Boing Boing:
The Internal Revenue Service (IRS) is going after a single mother with two kids who makes $10 an hour at Supercuts. When she asked why she was being audited, the IRS told her: “You made eighteen thousand, and our data show a family of three needs at least thirty-six thousand to get by in Seattle.”
The issue in question was that the IRS decided that it was a red flag when the single mother of two wasn’t meeting what they considered to be a threshold amount of income to be supporting her family. After going over her returns and learning that she was actually living with her parents and paying them rent to stay there, the IRS decided that she in fact wasn’t supporting her children, and enventually asked her to return the money she had received by claiming them as dependents.
[T]he agency insisted Rachel couldn’t prove she was supporting her children — she didn’t have enough receipts — so she had to stop claiming them as dependents. A few weeks ago she paid back $1,438 (plus penalties and interest!) on that issue.
Way to go, IRS. You did an investigation likely costing tens of thousands of dollars (counting both sides) to squeeze a grand out of a single mom who did nothing wrong.
According to the article, in 2006 a person who received an earned income tax credit, a credit given to the working poor, was more than twice as likely to be audited than the rest of the tax paying public. And, a large percentage of those who receive an EIC refund are women, especially single parents.
So, to summarize, by trying to save more money to care for her children, a single mother making $10 an hour living with her parents was told by the IRS that she didn’t have enough money to exist on. And, once they proved that was the case, the IRS then penalized her by…taking away more money.
And people wonder why it is hard to pull out of debt in America.
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