can i prepare and file tax returns for people like this?

The proper question would be "Should you prepare returns...? And the correct answer is that a TP is not required to have documentation to create the responsibility to file a tax return. It is the income which creates the responsibility.

Say I am paid $100 by each of 100 people. I get no 1099s etc., but I have $10,000 of income. Do I need to file? Yes.

AM - I think rdimas is concerned about people that don't really work or have income but claim that they do in cash in order to receive the earned income credit and child tax credits.

Such people are self employed, therefore the are required to have kept records of their income and expenses.  Whether or not you choose to accept them as clients is a decision only you can make.

TAXOH  is correct that is my concern, what if they say hey Mr. RDIMAS i work as a babysitter during the whole year and i made 14k during the year here are my w dependents. how much am i geting back? how do i know this person really worked as she says she did? or is she just trying to file a fraudulent return in order to get the money?

And there are plenty who will do that. If it smells fishy it is probably not just a fish.

I am always amazed by the prodigies who can barely sign their names, but somehow know what income level will maximize their EIC within 50¢.

Sometimes returns have to pass the smell test.  If you think someone is trying to do something kinky, send them elsewhere.

The answers are absolutely correct if you have a funny feeling or dont trust them based upon what they tell you definitely send them elsewhere

It's the IRS's job to police the tax returns. It's your job to help people file and pay their taxes properly - Income Tax Preparer. It's a business tax return - go through and ask questions - how many kids did you babysit? how often do you work - how many times a week, etc. - what's the average charge per different families? how far do you go to the work site? bus or drive? etc.

These queries will tell you - the accuracy of their projections - the state of their record keeping, the likelihood of their ability to be honest with you, whether you should take careful notes for their file (copy included with their copy of the tax return), advise them of better record keeping strategies, quote them a price that they'll probably walk out on, or tell them flat out that you're uncomfortable with the lack of records and send them elsewhere.

It happens that certain professions simply don't pay so well. For the snide ones that guess that poor people know to the 50 cent mark where the EIC is highest - that is a sign of the same elementary tax planning that wealthy business folk employ - (and it usually isn't true - if they knew how to figure it themselves they'd do their own return and save the cash for food for their kids). 

And I have noticed time and again that most business people have a fairly good intuitive feeling for their income and cash flow - as long as things are normal - under stress or calamity, their projections become wildly wrong.

Tell the person you need some type of proof of  their income.  I had a guy do that with me last year but the people had paid him with checks so he got ahold of them and had them make copies of the cancelled checks that were made out to him and cashed by him.  Originally 
 he had told me his income was $12,000.00 but he was only able to document $4,200.00 and that's the number I used.

I do believe I've just been scolded.

>>>For the snide ones that guess that poor people know to the 50 cent mark where the EIC is highest - that is a sign of the same elementary tax planning that wealthy business folk employ<<<    

Except that it's illegal, and "wealthy business folk" generally employ legal tax planning methods.  At least, my clients do.

What is illegal about reading the EIC table? It is illegal to try to get more money from the Treasury than is rightfully yours according to the law. It is illegal to NOT declare income, however earned. It is almost impossible in this day and age to leave no trace. A variety of options are available to help prove income and expenses - starting with a simple estimate of what it actually took to run their particular household.

Taxoh - if that was a full accounting, you did him a service. If a tax authority comes back suggesting that he couldn't have survived on that income and must be hiding income, then you did him no good turn but instead increased his danger and tax liability. If you help a non compliant (IRS language) taxpayer, become compliant for many following years, you've helped his/her whole family keep away from the agony of tax fear.

I'm not suggesting anyone doesn't cover their own responsibilities, and I never suggest anyone act contrary to established law. But if you are not going to help and protect your Taxpayers, who needs you - let the IRS calculate everyone's taxes.

Nansea - I did explain to him about keeping better records and if someone does pay him with cash to get some sort of receipt for it.  He also gets government assistance and assistance from local charities and friends so I doubt they would think he is hiding income. 

Also I had a new person with a 1099 MISC a few years ago that had tried to have her taxes done by some other preparer and they wouldn't even do them because they said she could have made the 1099 MISC herself.  I did prepare her taxes for her.

Nothing is illegal about reading the EIC table.  But I've met a lot of smart dumb folks who know just how much to tell you they made to maximize the credit. 

This thing is starting to sound an awful lot like the discussion on royalties.  I just have one thing to say on this -------------- I agree to disagree.  If everybody is smart they will just slowly walk away.

Sorry IRMN but one more thing for those interested.

Go to this link and check out example 4:

http://www.eitc.irs.gov/rptool...

Excellent example.  Housecleaner, daycare, same difference.

TAXOH, nice link!  Woof!

What's the scoop on the point generator?

Thanks.  I think the generator is still broken.