My brother and his taxes -

[blahbleebloo]

What is the name of your state (only U.S. law)? Georgia

I know 3rd party questions are a no no, but I couldn't resist posing this question to you experts for your opinion.

My brother is 20 years old and is working to support his 2 year old daughter. He recently got some advice from a (supposed) CPA regarding his taxes and now has gotten a letter from the IRS saying they need more proof.

Here's what's what: The kid lives with her mother, but because her mother doesn't work, my Bro claims the kid on his taxes. This year the "CPA" (I'm just not sure she's currently licensed) advised him not only to take the Earned Income Credit, but to fill out a Schedule C to input more income that he didn't actually earn in order to bump up the credit. My bro allegedly questioned this at the time (yeah sure), but stupidly decided to do it.

Now, shock of shocks, the IRS is questioning the return. They say that he can't get the EIC because his kid doesn't live with him, so they're asking for proof that she does. Well obviously she doesn't so that's not an option. I told him to file an amended return, but he doesn't want to do that because he added in all of this "other income" on Schedule C that he can't afford to pay taxes on.

I basically told him his big choices were to pay the taxes on his made up income or explain the situation and hope for mercy. Can anyone think of any other option he might have? Thanks much. -Annie

 

[tranquility]

It's hard to unwind tax fraud.

 

[davew128]

Can anyone think of any other option he might have?

Get used to the feeling of a colonoscopy as he will be spending time in a place where that region of his body will be penetrated quite often.

 

[blahbleebloo]

Yeah kind of figured there wasn't much else available to him. I told him just to face the music and be as up front as possible about it and maybe they won't hit him too hard. I told him to go against our "family code" and actually just tell the truth. I'm so glad I live across the country from my family.

 

[LdiJ]

What is the name of your state (only U.S. law)? Georgia

I know 3rd party questions are a no no, but I couldn't resist posing this question to you experts for your opinion.

My brother is 20 years old and is working to support his 2 year old daughter. He recently got some advice from a (supposed) CPA regarding his taxes and now has gotten a letter from the IRS saying they need more proof.

Here's what's what: The kid lives with her mother, but because her mother doesn't work, my Bro claims the kid on his taxes. This year the "CPA" (I'm just not sure she's currently licensed) advised him not only to take the Earned Income Credit, but to fill out a Schedule C to input more income that he didn't actually earn in order to bump up the credit. My bro allegedly questioned this at the time (yeah sure), but stupidly decided to do it.

Now, shock of shocks, the IRS is questioning the return. They say that he can't get the EIC because his kid doesn't live with him, so they're asking for proof that she does. Well obviously she doesn't so that's not an option. I told him to file an amended return, but he doesn't want to do that because he added in all of this "other income" on Schedule C that he can't afford to pay taxes on.

I basically told him his big choices were to pay the taxes on his made up income or explain the situation and hope for mercy. Can anyone think of any other option he might have? Thanks much. -Annie

Take your brother by the hand and take him to see a tax profession. Do an amended return to see where he would actually stand, and then discuss options with the tax professional.

The alledged CPA who advised him to do what he did really needs to be reported to the IRS.

 

[blahbleebloo]

The alledged CPA who advised him to do what he did really needs to be reported to the IRS.

Amen to that! I think that ticked me off even more because I'm studying to be a CPA and those are the types of practices that give accountants a bad rap. I can't stand dishonest people. I'm a soon to be CPA with some moral fiber.

Thanks for the advice LdiJ. You rock as per usual.