Audit

[Notaboy]

My wages $10,136.00

Federal tax withheld $983.00

Unemployment $9,942.00

Federal tax withheld $993.00

Other income gambling $1,620.00

Federal tax withheld $0.00

3 dependants under 16yrs old

My tax preparer used prior yr earned income $16,441.00 

AGI $21,698.00

Earned income credit $6,274.00

My refund $12,461.00

I got audit 2021 return I received $1,687.00

Did my tax preparer make a mistake.

[NCperson]

@Notaboy  

Are you stating that the IRS only sent you a refund of $1687 and not $12, 461? is that your issue? or did the iRS send you an additional $1687?

please repost.  

Based on the information you posted, assuming the children are between the ages of 6-17, and you filed HOH, the refund calculated is correct. 

did you receive a notice from the IRS why they adjusted your return (that will come 2-3 weeks after the money arrives).  did you ask the preparer? 

It is almost as if the IRS removed the 3 children, so that the Child Tax Credit was removed and the Earned income credit was removed as well (if single, income is too high for EITC)... did anyone else claim these children?????????

[Notaboy]

Correct on return $12461 Irs adjusted $1687 I have to prove 3 dependants are my biological daughter's and proof of residency but here's the catch I was audit back in 2015 all 3 dependants and same address I always use I proved the dependants are my biological daughter's and nobody claims them but me and my address is still the same back in 2015. On another note when I go to I irs website and use EIC assistant to calculate EIC I use $10,136 my 2021 EIC $6,275is greater than 2019 $6,274 EIC by one dollar.

[Notaboy]

So I can't use 2019 prior year earned income credit because 2021 earned income credit is higher by a dollar.

[NCperson]

@Notaboy -

The special rule is if your 2019 Income is greater than your 2021 income, and it yields a higher EITC credit, you can use 2019 EITC instead of 2021 EITC.

your 2021 income is $21698 and your 2019 income (presumably 2019) is $16441, so since your 2019 income is NOT greater than 2021, you can't use the special rule. 

[Notaboy]

Actually my 2021 earned income is $10,136 because unemployment benefits & gambling winnings are unearned income so 2019 earned income $16,441 is higher but using my 2021 earned income $10,136 yields a higher earned income credit $6,275 as to 2019 earned income $16,441 earned income credit $6,274 so either way my tax preparer should've caught that right. 

[Notaboy]

My 2019 AGI $20,168

2019 unemployment $3,727

2019 earned income $16,441

2021 AGI $21,698

2021 unemployment $9,942

2021 gambling winnings $1,620

2021 earned income $10,136

[NCperson]

@Notaboy - did the tax preparer use software to complete the return or did they do it manually?????

[Notaboy]

So why did irs audit me twice 2015&2021 

When Evey year I been filling a tax return I claimed my 3 daughter's ages 14 and two 7 yrs old (twins) and same address nobody else ever claimed my kids not even thier mom I proved all my information back in 2015 and received my tax refund in July 2015 about months later.

[Notaboy]

I hope software I fill with h&r block every year after I got audit in 2015 just because the fact I got audit.

[Notaboy]

I filled on 01-30-2022 in office with h&r block like I did since 2016.

[Notaboy]

If you can help me calculate my 2021 earned income credit using 2021 earned income $10,136 then calculate using 2019 earned income $16,441 and see what yields a higher earned income credit to see if I'm wrong I would appreciate it.

[NCperson]

@Notaboy - the EITC is correct as posted on your tax return.

In your case the EITC look up is based on the higher of 2019 or 2021 Earned income.  Since the 2019 earned income is higher ($16441) the table yields $6728 while using $10136 as the Earned income yields EITC of $4556.  Since 2019 earned income is higher than 2021 earned income and it yields a higher EITC, you can use that.  So we use $6728. 

But if  you look at the worksheets that are used to determine EITC,  you are to look up EITC based on the Earned Income (which you did: $6728 ) and compare that to the EITC when using AGI..... if you look up the EITC for an AGI of $21,698 it is $6274. 

The lower of those two EITC figures is the benefit, which in this case is the $6274.  That is correct.  

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

look at the table beginning on page 47 - use the HOH column (the left set of columns) with 3 children. 

[Notaboy]

The IRS paid me $14 interest on unemployment refund back in July 15, 2021 I didn't report when I filled because I didn't know it was interest the IRS sent me $2,158 $14 was interest in July 15 2021 because $10,200 was not taxable h&r block know because every year my tax refund go to h&r block emerald card not only that h&r block keep me updated on unemployment refund from IRS not only that I fill with them evrey year all my information is with them is it possible I got audit because I didn't report this interest it counts as earned income.

[Notaboy]

Irs sent me a 1099int $14 I never received it but I can see it on my irs account