Sunday, June 12, 2011
EITC and Social Security Disability Claims
If you are disabled and applying for Social Security Disability do not be lured into filing for an illegitimate EITC (earned
income tax credit); it is a criminal act that could very well be caught by the IRS and will damage your SSDI claim as well.
This is explained below by Tracey Cahn, Esq. who is a member of my disability law firm of Kazmierczak &
7:13 pm edt
The earned income tax credit, or EITC, offers a tax refund for low wage workers. It is
so generously written, a worker with no tax liability can get a refund. However, if you are disabled, and have not actually
earned income, STAY AWAY FROM IT.
Over the last 10 years that I have been practicing Social Security disability
law, I have run into three brick walls caused by the EITC being used illegitimately. All three of the claimants involved
were extremely poor, and had been on welfare and like services for years. Each of the three had a “friend/tax
professional” prepare their taxes. In each case, the “friend/tax professional” had advised the claimant
to take advantage of the EITC; and each claimant signed a tax return reflecting income of $3,000 to $7,000.
I will explain what happened in one such case. Because the ALJ had only just obtained a recent run of her earnings,
I had no advance warning that her tax record reflected an additional $6,000 in self-employment income, after expenses.
The judge asked my claimant about her earnings in 2010. She stated what I knew to be the truth; after
her medical condition had kept her out of work for eight (8) months, she made an unsuccessful work attempt. She began
working in July 2010 and within two (2) months, she suffered a seizure and heart failure, and has not worked since.
The Judge acknowledged this but then went on to ask about her self-employment income. She denied having any.
The Judge asked her about the $6,000 stated to be earned as self-employment. She said that that was a mistake; she never
earned that money. The Judge said he had gotten this information from the IRS, and asked whether that income was reflected
on her 2010 tax return. She then stated that the tax return had been prepared by her “friend”, a new tax
professional, and she had told her to sign the return because she would get money back. The Judge was stuck, and the
claimant and I were stuck.
My argument to the judge was going to be that the claimant’s summer 2010
work should be considered a failed work attempt, and she should be found disabled as of her alleged onset date in November
of 2009. Based on her medical records, and her actual work experience, this was a reasonable argument. However,
this “$6,000” is now throwing a monkey wrench into it. The claimant’s credibility is tainted by this
As it is, I have spoken with the Judge at length. He is a merciful fellow and I believe he
will support a favorable finding, but instead of November of 2009, he may well only grant benefits as of the end of August
2010. Thus, her hope of getting a $2,000 refund, likely has cost her 10 months of Social Security benefits. She
never did receive the “refund” and even if she had, the loss of 10 months of Social Security disability benefits
is worth far more than the anticipated refund. Before following advice from a “friend/tax professional”
on getting an EITC consider the possibility of criminal charges for fraudulent statements to the IRS and the affect it
will have on your credibility in a Social Security Disability claim.