Law Commons^™

Those Who Know, Those Who Don't, And Those Who Know Better: Balancing Complexity, Sophistication, And Accuracy On Tax Returns, Michelle L. Drumbl

Michelle L. Drumbl

Refundable credits, particularly the earned income tax credit (EITC) and the child tax credit, serve an important anti-poverty measure for low-income taxpayers. Annually, millions of taxpayers who do not owe any federal income tax must file a tax return in order to claim these credits that are in the nature of social benefits. The eligibility requirements for refundable credits are complex, and these returns are particularly prone to audit: EITC audits comprise one-third of all individual income tax audits. Because of the large dollar amounts at stake, a taxpayer’s mistaken understanding of the eligibility requirements for these refundable credits can …