Eic 2011

[Terry]

Here's my scenario.
Potential client asks me to prepare his (MFJ) and children's returns for 2013. They are originally from a foreign country, and have lived in U.S. since 2009. They all have valid SSN's, etc. I am dealing with the Husband, and his English is difficult to understand. He says his wife is confused as they got a $5000 refund one year and next year not so much. I asked him to bring me his 2012 tax returns. He actually brought me 2011, and just tonight I thought I would review them just to see what I could find out. He also told me he paid someone to do them, but they moved.
Anyway, open 2011 paper returns for husband and wife, there are three children claimed as dependents on return and a large EIC amount, thus giving them $5000 refund. Open children's returns, and they all have claimed themselves too! All returns were marked as "Self prepared".

What's your opinion as to the best way to handle this?
1) Run as fast as I can the other way!
2) Amend returns? and if so, amend the children's, which by the way, I think at least one of the children was over 17 years old, but attending college.
3) Other suggestions? I feel like someone took advantage of this family, and I would like to help this family, but I don't want to stress myself out or borrow trouble.

Thanks to those who respond, and best of luck this tax season.

[David1980]

Depends. What's the vibe you get from the taxpayer? Some of these I see the taxpayer got exactly what they wanted. And they want it again. Regardless of whether it's right or wrong. If that's the type of taxpayer I run the other way. Others, they really have no idea. They want to fix it or at least do it correctly going forward. Often they got a letter from the IRS from the prior year return and that's why they're seeing me and not the old guy or someone like him. I do those returns.

[ATSMAN]

A 2011 return should have received a notice by now for dependent claiming their own exemption. May be it is late but if you tell this person the consequences of setting things right by amending the returns you will look like the bad guy. It will cost him some serious cash and with the communication barrier he may not appreciate that you are trying to do the right thing.

I would do 2013 correctly and let him deal with the inaccurate prior returns when he gets a notice. At least then you don't look like the bad guy!