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...if you are not a pro.

Okay, some of you know that I'm a graduate student who enjoys doing taxes, reading about taxes, thinking about taxes, etc. And over the years I've learned a lot about taxes and I know for sure I'm in the "above average" category when it comes to knowing about taxes (which isn't saying much!), particulary because of the good folks here on this boards, and also because I like reading publication 17. ;)

Anyway, in school I get lots of questions from people who have never done taxes or don't really know what they are doing. For better or worse, I'm the "tax guy".

Well a fellow student in my lab has had a rough time. When I first met her a few years ago, she hadn't filed state or federal for 3 years because she didn't have the money. In fact, the first 2 years she didn't know she had to file at all. I convinced her to file for past years, and she got on a payment plan with the IRS and the state and she's moving on. Well, she's had a rough life, and it was made rougher when her 15 year old brother got expelled from school in NYC. He was sent to live with her, and her mom basically disowned him. My friend managed to obtain FULL legal custody, got him enrolled in a school in AL and is now basically a single "mother" at the age of 26, raising him solely on her meager stipend.

Well, she was QUITE happy to hear from me that she could now claim her brother as a dependent, file head of household, and get the child tax credit. That would basically leave her with zero tax due for 2004. This is good news for her, as she had been withholding properly for 2004; she'll get that back. I also informed her she'd probably get some EITC money. A couple of weeks ago I calculated she'd get almost $2000 on top of whatever withheld payments she'd get returned to her. She was elated, and I was glad to be the bearer of good news. I could see her paying her bills in her head. I told her to be ready to file as soon as her only necessary form (her W-2) came from the school.

Can anyone see where this is going?

Well, today I decided to carefully go through some info about the EITC. I was familiar with it, since I had helped other single mom grad students file and receive the EITC before. But uh oh. I had forgotten one TINY EENSIE WEENSIE detail. It had slipped my mind for good reason, because it had never come up. In order to qualify for the EITC, you need to be a US citizen. Resident aliens don't count. I knew that she had lived in the the US her whole life...but...I called her up. Turns out she was born in Jamaica and is NOT a US citizen. I hadn't thought to ask before. I told her the bad news. Poof! $2000 she was counting on down the drain.

It's my first tax "boo-boo" (well, not counting my personal taxes!), and I caught it before she filed or anything. But I had told her she'd qualify, and who knows, she might have already had "spent" that money based on what I had told her. So there were potential consequences. I feel really bad, and I should have gone through the EITC details before I told her she get any money.

But you know what I REALLY should have done? I should have printed her out the publications which dealt with the EITC, as well as links to info, and said "hey, look into this EITC thing and see if you may benefit, now that you have a dependent and your filing status has changed".

I think both of learned a very good lesson.

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