Question

Sheila pays cash to her Aunt Martha for watching her children. During the return processing, the Oregon Department of Revenue asks Sheila to show proof of expenses for the Oregon Working Family credit. Which of the following is *not* acceptable proof?

a. Aunt Martha recreates receipts for the payments Sheila made during the year.
b. Duplicate checks along with bank statements.
c. Cancelled checks or money order stubs.
d. All of the above are acceptable.

Answer 1

Aunt Martha recreating receipts is not acceptable proof for the Oregon Working Family credit. Duplicate checks and bank statements or cancelled checks/money order stubs are acceptable forms of proof. Like the federal EITC and CTC, the state-level credits support work and reduce poverty but with fiscal implications for the government.

Step-by-step explanation:

Regarding the question about which form of proof is not acceptable for expenses related to the Oregon Working Family credit, option 'a' is generally not acceptable. Aunt Martha recreating receipts for the payments Sheila made during the year might not provide a verifiable audit trail acceptable to the Oregon Department of Revenue. On the other hand, options 'b' and 'c', which are duplicate checks along with bank statements and cancelled checks or money order stubs respectively, are more likely to be accepted as they provide a clear financial trail.

The Earned Income Tax Credit (EITC) is an example of a federal credit that resembles this state-level policy. The EITC, along with credits like the Child Tax Credit (CTC), and programs like TANF (Temporary Assistance for Needy Families), are designed to support work and reduce poverty, but they come at a cost to the government in terms of direct outlays or lost tax revenues.