EITC Due DiligenceCode: 25-EITCDD

45 pages
Course description and objectives:

The Earned Income Credit (EIC) is a refundable tax credit that has a significant impact on United States revenue. It is also the source of a disproportionately large number of errors in tax returns in which a claim for it is made. In a recent year, 150.3 million individual federal tax returns were filed, and more than 27.4 million—18.2% claimed the Earned Income Credit1. Based on that percentage, it would not be unexpected that, in the years ahead, approximately one taxpayer in every five will claim the EIC. Approximately 70% of federal income returns claiming the earned income credit are prepared by professional tax return preparers. This course briefly summarizes the earned income credit rules, examines the common errors committed when claiming the credit, discusses the EIC due diligence requirements imposed on professional tax return preparers, and identifies the sanctions to which preparers and their employers may be subject for a failure to meet expected due diligence requirements.

Learning Objectives Upon completion of this course, you should be able to:

•  Recognize the earned income credit eligibility rules;
•  List the common errors committed in connection with claiming the earned income credit;
•  Describe the consequences for the taxpayer of the IRS’ disallowance of the earned income credit;
•  Identify the tax return preparer’s earned income credit due diligence requirements; and
•  List the sanctions that may be applied on a tax return preparer and his or her employer for a failure to meet due diligence requirements.

Presentation Method: QAS Self-Study

Category: Taxes

CPE credit: 2 Hours

Program Level: Update

Prerequisites: None

Advance Preparation: None

Exam expiration date: Participants must submit exams for grading within one year from the date of purchase