IRS audits single mom living in Seattle because she didn't make enough money

[Deb13b]

Over here in the Uk we get working tax credit and child tax credit, they basically are a top-up for people on low incomes. They are a godsend for me, I couldn't manage without them. But you just about have to jump through hoops to get it.

The benefits system here is sh*te ! I work 16 hours a week for minimum wage, £5.80 per hour. My partner was laid off from his job in February because his boss had no more contracts, his business was finished. My man could claim £60 per week jobseekers allowance but after 6 months it changes to income support, which is means-tested. He doesn't get a single penny now. Apparently my £90 a week wage and tax credits is enough for 2 adults and a child to live on.

[halfwaynowhere]

Originally Posted by aranarose

The IRS audited her parents in the process as well, and they were completely cleared. Which means they were on the up and up with taking rental payments from their daughter, etc. Because believe me, if you don't report THAT as income, the IRS will tag you hard.

I just did a quick apartment search for the Seattle area, and found a range of $500 to $2000 for apartments, so $400 to rent part of a house (which is ultimately what this woman is doing) is not really that far out of line. The IRS can't determine what is and isn't a reasonable rent. That is not their job. She's paying rent, and she pays for everything for her kids, which means she is providing support for them.

I'm pretty sure the only reason I, with my tiny income, have not been tagged for IRS audit is because I do live in an area where you CAN live on what I make. Hell, making the $18k a year that she makes would feel like luxury living to me...

The IRS cannot determine rental values, but they can determine whether the person is truly supporting themselves without assistance using fair market value.

I'm not saying that the IRS calculations are correct- I'm merely pointing out what things they look at in an audit. It is entirely possible for her to be supporting her kids with that income, but I can understand how it can raise some red flags with the IRS.

[kingcanine]

Wasn't the IRS supposed to be abolished after WW2, or something like that? The way I heard it was that it was set up to get money for the war effort, and was supposed to shut down after we won. Correct me if I'm wrong though.