Question

As a result of the tax cuts and jobs act of 2017, there are now due diligence requirements for

Answer 1

1. Complete and Submit Form 8867

• Complete Form 8867 PDF, Paid Preparer's Due Diligence Checklist, for each return or claim for refund you preparer that claims EITC, CTC/ACTC/ODC, AOTC and/or HOH filing status.
• Complete the checklist based on compliance with due diligence requirements and information provided by your client(s).
• Submit the completed Form 8867 to the IRS with every electronic return you prepare claiming the EITC, CTC/ACTC/ODC, AOTC and/or HOH filing status.
• Attach the completed Form 8867 to every paper return or claim for refund you prepare claiming the EITC, CTC/ACTC/ODC, AOTC and/or HOH filing status and send to the IRS.

  2. Keep Records

  Keep a copy of the Form 8867 and the worksheets used to determine credits. Keep a record of all additional questions you asked your client to comply with your due diligence requirements and your client's answers to those questions. Keep copies of any documents your client gave you on which you relied on to determine eligibility for the credits or HOH filing status, or to compute the amount of the credits. Keep a record of how, when and from whom you obtained the information used to prepare Form 8867 and the applicable worksheets. Keep your records in either paper or electronic format but make sure you can produce them if the IRS asks for them

• 3. Ask All the Right Questions

  Not know or have reason to know any information used to determine a client's eligibility for the credits and HOH filing status or compute the amount of the credits is incorrect. Not ignore the implications of any information given by the client or known and must make additional inquiries, if a reasonable and well-informed tax return preparer, knowledgeable in the law, would conclude the information is incomplete, inconsistent, or incorrect. Know the law and use that knowledge of the law to ensure you are asking your client the right questions to get all relevant information. Document any additional questions you ask and your client's answer at the time of interview

4)compute the credit Based on the Facts

Complete the appropriate worksheets for each credit based on information provided by the client or information you otherwise reasonably obtain or know. The worksheets show what to consider in the computation. Keep the records showing how you did the computations. You can find the worksheets for the EITC and the CTC/ACTC/ODC in the instructions for Form 1040 and 1040NR. The ACTC worksheet can also be found in the instructions for Form 1040-SS and 1040-PR. You can find the AOTC worksheet in the instructions for Form 8863. You can also complete your own documents that contain the same information as the official worksheet These worksheets are included with most tax preparation software.