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:
2018 Changes to Form 8867 (Preparer Due Diligence Checklist)
November 9, 2018
2018 Depreciation Changes
October 18, 2018
2018 Tax Law Changes that are Directly Reported on Form 1040
October 3, 2018
IRS Tax Transcripts Changes
September 27, 2018
Revised 2018 Schedule A due to Tax Cuts and Jobs Act Changes to Itemized Deductions
August 29, 2018
2018 Expansion of Preparer Due Diligence Requirements
August 8, 2018