Professional Editions - Paid Preparer's Due Diligence Checklist

Per the IRS Due Diligence Law webpage:

Requirements for paid preparers when claiming certain credits or head of household filing status

Under the Internal Revenue Code, a penalty can be assessed against a paid tax return preparer for not meeting due diligence requirements when preparing a return or claim for refund claiming the:

  • Earned income tax credit (EITC),
  • Child tax credit (CTC), additional child tax credit (ACTC), credit for other dependents (ODC),
  • American opportunity tax credit (AOTC), or
  • Head of household (HOH) filing status.

In the TaxAct program, a Red Alert will appear in the Review section of the program if Form 8867 needs to be completed.  It is the responsibility of the preparer to be sure all questions on Form 8867 are answered accurately. The TaxAct program allows you to select Yes, No, or N/A for all of the questions, but there are some questions where you should not choose N/A, even though the TaxAct program allows you to. Below is a list of how these questions must be answered.

  • Lines that must be answered as Yes or No (do not choose N/A, and do not leave it blank):
    • 1, 3, 4, 5, 6, 15
  • Lines that must be answered as Yes, No, or left Blank (to leave it blank, you can choose N/A, or just leave it blank):
    • 4a, 4b, 9a, 9b, 10, 13, 14
  • Lines that must be answered as Yes, No, or N/A (do not leave it blank):
    • 2, 7, 8
  • Lines that must be answered as Yes, No, N/A, or left Blank:
    • 7a, 9c, 11, 12

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.