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2018 Expansion of Preparer Due Diligence Requirements

August 8, 2018


The Tax Cuts and Jobs Act expanded the preparer due diligence requirements to include the Head of Household filing status and the new credit for other dependents beginning with 2018 individual returns.

Recently the IRS released a draft of the 2018 Form 8867 (Paid Preparer’s Due Diligence Checklist) which included the changes needed for this expansion as follows:

  • New checkbox for Head of Household has been added to Part I which covers due diligence questions 1 - 8 that apply to the four credits and the head of household filing status.
  • The new credit for other dependents has been added as part of the child tax credit checkbox on Part I.
  • New Section V has been added which includes a question for the head of household status.

For more details on what these changes are see the draft of the 2018 Form 8867 on the IRS website.

Also, be aware that the Section 6695 penalty amount for failure to comply with the preparer due diligence requirements has been increased to $520 for each of the applicable credits and the head of household filing status for 2018 returns. This could result in a $2,080 penalty per return if all the applicable credits are claimed, the head of household filing status is used and the IRS determines that the preparer did not follow their due diligence requirements.

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