Why does filing separate disqualify you from the earned income credit?
Why does filing separate disqualify you from the earned income credit?
I can't think of what fraud it prevents.
Here's what Perplexity.ai said:
However, filing separately as a married couple generally disqualifies you from the EITC because it could potentially be used to circumvent the income limits of the credit. For example, if one spouse has a low income and the other has a high income, they could file separately to make the low-income spouse eligible for the EITC, even though their combined income would be above the limit for the credit
If the government can't keep track of the money they take that they're supposed to give back because they shouldn't have taken it in the first place then they shouldn't take it in the first place. 🤷 They use it all year long to earn interest which we never see even though it's our money they're borrowing and to many of us that interest could make a huge difference.
Because of the particulars of US tax code, individual tax liability is a function of income, information voluntarily provided to them. At least, the accuracy of the info is voluntary; submitting a w4 is required on hiring. Since you can claim five dependents and then file with zero, the government won't know what you owe until you file.
Some people use this incongruency to pay almost nothing during the year and pay in at filing. Others do the opposite to avoid underpayment.
Tax prep industry has helped to make the process disgustingly opaque, and I sure wish it was simpler.