Introduction Form 8867 is a safeguard for the tax preparer and the tax preparer's company. It is a form used by the Internal Revenue Service (IRS) to determine that the tax preparer is completing all necessary documentation for the applicable tax credits applied for by the taxpayer. It places legal responsibility on the tax preparer "to exercise due diligence when preparing any client's return or claim for refund," and furthermore, "meet specific due diligent requirements set forth in Treasury Regulations when [they] prepare returns and claims for refund involving the EIC, the CTC/ACTC/ODC, the AOTC, and/or HOH filing status" (IRS, 2022). The first two questions ensure that the preparer completed the necessary supplemental documentation for EIC (Earned Income Tax Credit), AOTC (American Opportunity Tax Credit), HOH (Head of Household), and CTC (Child Tax Credit)/ACTC (Additional Child Tax Credit)/ODC (Credit for Other Dependents). Question three requires the preparer to answer that they interviewed the taxpayer personally and asked the necessary questions for the documentation and to ensure eligibility for the applied credits. Question four requires that the preparer elect that they found no discrepancies in the interview with the taxpayers and the documentation. The next two questions detail the record-keeping requirements and documentation requirements to apply for the credits. Finally, the preparer is required to answer whether the taxpayer had been refused or questioned on the above credits in a prior year. Part II, Part III, Part IV, and Part V require that the preparer sign off on more in-depth, specific questions regarding the EIC, CTC/ACTC/ODC, AOTC, and HOH credits accordingly. Lastly, part VI requires that the tax preparer certify that Form 8867 and additional required documentation were filled out honestly, completely, and with the due diligence necessary to certify so under the law (Department of the Treasury Internal Revenue Service, 2022).
Knowledge Requirement The tax preparer must interview the taxpayer and perform adequate questioning to ensure the taxpayer is eligible for certain credits and determine eligibility amounts for those credits. The tax preparer is required to document such taxpayer responses on Form 8867 to ensure eligibility (TaxSlayerPro, 2019). Furthermore, the tax preparer must be up to date on any instructional changes to these credits to ensure the taxpayer is filing appropriately. If the tax preparer is unsure if the limitations or amounts have changed, they may visit the IRS website.
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