EIC - Eanerd Income Credit

CTC/ACTC – Child Tax Credit/Additional Child Tax Credit

AOTC (Education Expenses) – American Opportunity Tax Credit.

 

There are deductible and/or reimbursable credits for certain people, whether they are the taxpayer(s) or dependent(s), who work, have earned income and meet certain income, residency and U.S. legal status criteria.

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The IRS requires paid preparers of federal income tax returns involving those credits to meet the due diligence requirement in determining the taxpayer’s eligibility for, and the amount of, the credit. The preparer is required to complete Form 8867 Paid Preparer’s Earned Income Credit Checklist and it is submitted with the tax return. Preparers are required to ask for certain documents that they rely on to determine the taxpayer’s eligibility for the earned income credit and to also keep copies of those documents as part of their records.

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Failure to document the eligibility could result in a $500 penalty for each failure. So, while it may seem unusual to you, it seems your preparer is just doing what the IRS requires. Here are the records that can be submitted to document the taxpayer’s qualification for some or all of those credits:

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• School records or statement.

• Landlord or property management statement.

• Health provider statement or Medical records.

• Child care provided records.

• Social service records or statement.

• Place of worship statement.

• Employer statement.

• In Case of the AOTC, (education credits), submit Form 1098-T

• And last, but not least, “other.”