It also makes the credit more susceptible to fraud.
“Refundable tax credits are a nightmare to administer and lead to far too much of the American people’s money going out to those who aren’t eligible,” said Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee. “That the IRS can’t figure out how to rein in the improper Earned Income Tax Credit payments doesn’t bode well for the $1.1 trillion in ObamaCare subsidies.”
Using IRS statistics, the inspector general’s report provides an estimated range of improper EITC payments from 2003 through 2012. The report says the IRS paid out at least $110.8 billion in improper payments during the period, and perhaps as much as $132.6 billion.
The IRS says it is impossible to know the exact amount of improper EITC payments without auditing all 27 million taxpayers who received them, which isn’t feasible.
The amount of improper payments ballooned during the recent economic slump, hitting at least $15.3 billion in 2010, the report said. For 2012, the improper payments totaled between $11.6 billion and $13.6 billion.
Families earn the credits by working and earning money, though there are income limits. The size of the credit depends on your income and the number of children you have.
This year, a married couple with three or more children can earn up to $51,567 and still qualify for the credit. A married couple with two children can earn up to $48,378 and still qualify, according to the IRS.
The maximum credit this year is $6,044 for families with three or more children. The maximum credit for families with two children is $5,372.