When a taxpayer receives a larger Earned Income Credit amount after adding a Sch

Question

When a taxpayer receives a larger Earned Income Credit amount after adding a Schedule C to their return than they would have received without it, the Tax Professional must __________. Apply sound judgment to the information provided and document the questions asked and the taxpayer's responses.   Document the different amounts of Earned Income Credit calculated on the return with or without the Schedule C included.   Not include expenses on the Schedule C.   Omit Schedule C from the return.   When a taxpayer receives a larger Earned Income Credit amount after adding a Schedule C to their return than they would have received without it, the Tax Professional must __________.

Explanation / Answer

ANSWER: Apply sound judgment to the information provided and document the questions asked and the taxpayer's responses.   The tax proffesional must apply all his diligence in verifying if,self-employment income used to calculate the amount of eligibility for EITC is correct & not under/over reported just enough to claim the maximum Earned Income Tax Credit . He must genuinely doubt when the tax payer manages to cliam exactly the maximim credit available , especially when schedule C (Filing expenses & income Of self-employment along with Form 1040),is filed along-with.

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