NEW HOME BUYERS CREDIT & EITC

[Edward]

Have new client - they put in for extension this year and came to me to finalize their return. They had a First Time Home Buyer Experience and closed on the $125,000 home on Aug 10th, 2008. Everything looks in order and the 5405 will award them the $8,000. In looking at their 2007 returns, I note that one spouse filed single and the other as head of household so as to claim the EITC. (If they had filed MFJ NO EITC). They said alot of their friends are filing via IRS free-file and also claiming the EITC even tho they should also be filing MFJ. The new clients have been filing like this since 2004. I told them they could have criminal charges filed against them by the IRS for such filings. Anyway I suggested they bring in the returns for 2004 thru 2006 and that I would advise them later on a course of action. I set up a new

appointment date but don't know if they will return. WHAT DO I DO NOW?? Amend those returns; or send them somewhere else? Any suggestions? Thanks.

[Lion EA]

Wasn't the 2008 credit only $7,500 with repayment? You should advise them to amend, but they will make the decision. You get to make the decision about taking them on as clients. Is there 2008 return MFJ?

[mlinder42]

You can only advise them what to do. If they do not follow that advice it is your decision to do 2008 return or not. Legally you can still do this years return correctly. What about 2007? I may be jaded because in my area we kid that they get divorced at the door but who knows if they are really married.

[Edward]

The closing date on the purchase was 10 Aug 2009, not 2008. If I do their 2008 tax return it will be MFJ. They told me

they were married in late 2003 and have lived together since, and have 2 children from this marriage. I will file them

joint for 2008 and let IRS carry on from there.

[JohnH]

You might want to consider adding a "hassle factor" into your bill. From what you've posted, I suspect you're likely to be seeing a lot more of this client in the coming months. And quite a bit of that time is likely to be spent explaining why it wasn't YOU who got all this hassle from the IRS started.

[kcjenkins]

I'd just say that if while it is their call whether they amend, [i'm guessing they don't even come back] I would not do any year unless they agree to amend all the fraudulent returns. Because I would not want the problems that are likely to occur. Frankly, these people knew they were cheating and filing false returns, and now they only want to get some more 'free money' from the IRS. I suspect that they got more than 8K from the bogus EITC over those years.

[mcb39]

I wouldn't touch it. I am having enough problems with a legitimate FTHB Credit for an honest taxpayer. I think that if you agree to prepare their 2008 return, you jeoporadize your honesty because you KNOW that they have filed false returns in the past even though you did not prepare them.

[Gail in Virginia]

I agree with KC; I would only work with them if they agree to amend the prior years and come clean. If they are honest, they will - if not, I don't need the hassle of trying to keep dishonest clients from dragging me down with them.

[Tax Prep by Deb]

I agree with KC; I would only work with them if they agree to amend the prior years and come clean. If they are honest, they will - if not, I don't need the hassle of trying to keep dishonest clients from dragging me down with them.

I agree! It's amazing how many times a client can change their story depending on the outcome. Then if anything goes wrong the tax preparer is the first to get blamed!

Deb!