A new study shows that low-income families file their taxes with precision as well as adjusting to the latest tax laws passed by Congress year-after-year, in order to assure the maximum refundable tax credit.
Wall Street Journal staffer Richard Rubin takes a look at exactly how these people play with the numbers on their taxes to ensure they hit the "sweet spot":
Some of the maneuvers used by taxpayers can be borderline legitimate. A taxpayer could refuse to take real deductions to keep self-employment income artificially high.
Some are dubious. You can hit the threshold by reporting real income you might otherwise hide, like the $500 in cash you earned for odd jobs that the IRS would have no other way to know about. Or you can just completely fake it and make up numbers. That’s illegal.