re: Do people on medicaid, food stamps, and other handouts get tax refunds?

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You would think the system would set off a red alert when the ss# is entered more than once

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It does, but it doesn't stop the fraud. To claim the EITC you have to have earned income. Those who live off welfare/SSI/benefits sell their kids' numbers to people who do have earned income and get paid a couple hundred or so when the check comes in.

I used to prepare taxes; quit because it was so infuriating.

Some sellers never get paid. Some actually came into the office wanting to know when the buyer got the refund and how to make them pay. lol

Others, when they earned enough to file their own taxes, got rejected by the IRS because the buyers were still using the numbers the next year and the next. BIG lol.

It's common knowledge that if you have 2-3 kids you can work just enough not to affect the welfare/foodstamps (and have NO fed taxes withheld), then get a huge check each year.

Or, they can just lie that they're self-employed, file a schedule C, and get the EITC & CTC that way.

People like the above vastly outnumbered those who made a legitimate effort to support their families.

The whole set-up is a racket.

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The Inspector General found that when the SSA asked individuals about their earnings—which could make them ineligible for payments under the Supplemental Security Income program—thousands of individuals disclaimed those earnings.

Over the course of four years, the IG found that nearly 50,000 individuals reported—but later disclaimed—$742 million in self-employment earnings on their tax returns that had previously made them eligible for the EITC or other payments. In over half of these cases, involving $399 million in self-employment earnings, SSA failed to report the disclaimed earnings to the IRS, effectively preventing the IRS from investigating or recovering EITC mispayments averaging $4,053.

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LINK