Question

1) All of the following are due diligence requirements a paid tax preparer must meet when filing a return for a taxpayer claiming EITC, CTC/ACTC, ODC, AOTC, and/or head of household filing status EXCEPT:

A) Investigate and verify the accuracy of information the taxpayer provides to show eligibility for the credits and/or head of household filing status.

B) Complete all worksheets used to compute the credit. If the worksheet is completed by hand, keep a hard copy in the taxpayer's client file.

C) Document the questions and answers asked about significant issues on the return.

D) Complete and maintain a copy of Form 8867, Paid Preparer's Due Diligence Checklist.

Answer 1

All of the following are due diligence requirements a paid tax preparer must meet when filing a return for a taxpayer claiming EITC, CTC/ACTC, ODC, AOTC, and/or head of household filing status EXCEPT:

C) Document the questions and answers asked about significant issues on the return.

Due Diligence:-Section 6695(g) of Internal revenue code provides the regulation sets for due diligence.

Any person who is a tax preparer with respect to any return related to claiming EITC,CTC/ACTC/ODC,AOTC and/or Head of household filing status are required to comply with the following due diligence requirements.

There are four basic due diligence requirements.

1. Complete and submit form 8867.
2. Compute the credits based on the facts.
3. Ask all the right questions, to know the eligibility of credits and head of household status.

4) Keep a copy of record of form 8867