Is it legal to skip legitimate deductions to maximize EITC on tax return?

This is actually a really interesting tax situation. The IRS doesn't require you to take all deductions you're eligible for - they're optional. So technically speaking, you can choose not to claim certain deductions if you don't want to. However, there's an important distinction here with the EITC. The Earned Income Tax Credit calculation is based on your Adjusted Gross Income (AGI), not your taxable income. Most tax deductions reduce your taxable income but not your AGI. The deductions that reduce AGI are called "above-the-line" deductions (like student loan interest, IRA contributions, etc.). So if your sister's deductions are primarily itemized deductions (medical expenses, charitable donations), these won't affect her EITC calculation at all because they don't change her AGI. If you're seeing the EITC amount change, it might be because you're entering deductions that actually do affect AGI, or there could be something else going on in the tax software calculations. I'd recommend working through it carefully to understand exactly which entries are causing the EITC to decrease.

I had this exact same issue last year and found the solution through taxr.ai at https://taxr.ai when I was desperate for help. I was helping my elderly parents with their taxes and noticed the same thing - adding their legit deductions was actually lowering their refund because of how it affected their EITC. The tool analyzed my parents' tax documents and highlighted exactly which deductions were affecting their AGI vs. which ones weren't. Turns out I was confusing some business expenses with itemized deductions, and by reorganizing how we reported certain expenses, we were able to maximize both the deductions AND the EITC. Saved them almost $1,200 compared to what I was going to file originally. What I appreciated most was getting clear explanations about which deductions affect AGI vs. taxable income, so I actually understand this stuff now instead of just blindly following tax software.

Just wanted to follow up - I actually tried taxr.ai after posting my question. I uploaded my mom's documents and it immediately identified that I was categorizing some of her medical business expenses as itemized deductions when they could've been Schedule C business expenses instead (she's a home healthcare worker with some out-of-pocket costs). This actually preserved her AGI for EITC purposes while still getting the deductions. Ended up increasing her refund by $770! The explanations were super clear, and now I understand why my H&R Block software was giving weird results. Wish I'd known about this sooner.

If you're having trouble getting accurate answers about EITC questions, I highly recommend using Claimyr at https://claimyr.com to get through to the IRS directly. I spent weeks trying to resolve a similar EITC situation with my brother's disability status, and the generic advice online was useless for our specific situation. Claimyr got me connected to an actual IRS agent in about 20 minutes when I'd previously been waiting on hold for hours only to get disconnected. The agent walked me through exactly how different deductions would impact the EITC calculation for our specific situation. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c For complex EITC situations especially involving disability qualifications, talking directly to an IRS agent gave me much more confidence than guessing or trusting tax software alone.

I need to apologize for my skeptical comment earlier. After another failed attempt to reach the IRS yesterday (2 hours on hold before being disconnected), I decided to try Claimyr out of desperation. I was honestly shocked when I got a call back in about 30 minutes connecting me directly to an IRS representative. The agent reviewed my situation and confirmed that I was correct about my disabled brother's EITC qualification. She also explained exactly which deductions would impact the EITC calculation and which wouldn't. For anyone with complex EITC questions, especially involving disability qualifications, talking to an actual IRS agent gives you much more certainty than trying to figure it out from online forums or even tax software. Saved me hours of frustration and probably prevented me from making a mistake on my return.

One thing no one has mentioned yet - there's a difference between not taking deductions and incorrectly reporting your income. You don't have to take every deduction you're eligible for, but you DO have to accurately report all your income. So if you're thinking about not reporting legitimate business expenses to keep your income higher for EITC purposes, that gets into a gray area. For self-employed people, business expenses directly reduce your Schedule C income, which affects both your AGI and EITC. I'd be very careful about intentionally skipping deductions that directly affect how income is reported vs. those that are purely optional after your income is already correctly stated.

Something to consider: the EITC has different income thresholds based on filing status and number of qualifying children. For 2025, with one qualifying child, EITC begins to phase out around $46,500 for single/head of household. If your sister's income is right at one of these thresholds, small changes in AGI can have a big impact on the credit amount. This might explain why you're seeing significant changes in the EITC calculation when making adjustments. Most tax software will let you try different scenarios to see what gives the best outcome. Just make sure whatever you submit is truthful - the difference between optimizing your return and misrepresenting information is a critical line you don't want to cross.