Paid Preparer Due Diligence Requirements for Federal Refundable Credits and Head of Household Filing Status
This page is designed to give preparers a overview of their due diligence requirements which include the earned income tax credit, child tax credit, the American Opportunity education credit and now the head of household filing status and the new credit for other dependents.
Preparer Due Diligence Requirements Have Been Expanded to the Head of Household Filing Status and the Credit for Other Dependents
At the end of 2017 the Tax Cuts and Jobs Act expanded preparer due diligence requirements under Code Section 6695 (including the $520 penalty) to include not only the earned income tax credit, the child tax credit and the American Opportunity education credit but also the Head of Household filing status. Also, since the new Credit for Other Dependents falls under the Child Tax Credit code section, the preparer due diligence requirements also apply to this new nonrefundable credit.
As a result of these two changes the Form 8867 (Paid Preparers Due Diligence Checklist) will be modified as follows:
For more details see the draft of the 2018 Form 8867 on the IRS website.
Due Diligence Requirements for Return Preparers
IRS code section 6695(g) gives the IRS authority to penalize a tax preparer $510 for each return for which the preparer fails to comply with the due diligence requirements imposed by the Treasury Secretary by regulation with respect to determining the eligibility for, or the amount of credit allowance for the earned income tax credit, child tax credit or the American Opportunity Education Credit.
The Four Due Diligence Requirements can be summed up as follows:
For more information, see the Refundable Credit Preparer Due Diligence Law page on the EITC Central website.
For more information on other aspects of due diligence and refundable credits see the following pages on the EITC Central website:
2019 Federal Return and the Affordable Care Act
January 3, 2020
Extender and Disaster Tax Relief Provisions Included in the 2020 Consolidated Appropriations Legislation
December 27, 2019
Reminder of 2019 Federal Tax Changes
December 11, 2019
Virtual Currency and Form 1040, Schedule 1
November 11, 2019
2020 PTIN Renewal is Now Underway
October 28, 2019
Taxpayer First Act
October 11, 2019
2019 Changes to Form 1040, Associated Schedules and New Form 1040SR
September 5, 2019