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11 Cards in this Set
- Front
- Back
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The IRS can impose what type of band related to EIC
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Permanent ban for fraud
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What is the penalty for failing to exercise due diligence for EIC claims
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$500 for each failure for preparer. Tp must pay interest, ban for two years or ten years
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What are common errors taxpayers make in claiming the EIC
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Incorrectly reporting income or expenses to maximize credit, incorrectly claiming a child who does not meet the specific EIC requirements, filing as Head of Household when married
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What are the possible penalties for preparers who file fraudulent EIC claims
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Suspension or expulsion from irs efile , disciplinary action by the OPR, a ban preparing tax returns, a preparer penalty of $5K if the irs finds taxes owed is due to reckless or intentional disregard of rules and regs, $1K if position is unreasonable.
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What are the four due diligence requirements for preparers related to EIC
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1. Complete and submit the EIC check list
2.Compute the credit 3. Retaining records 4. Knowledge |
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How do you Complete and submit the EIC check list
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Complete form 8867., Parts I-III. Preparer due diligence=Parts IV and V.
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How do you compute the credit
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Computation usually included in software. Variables include self-employment income, total earned income, investment income, and adjusted gross income.
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What records must be retained
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Form 8867, EIC worksheet, copy of any taxpayer documents that were relied on to determine eligibility, a record of how when and from whom the information used to prepare the form and worksheet was obtained, a record of any additional questions that prepare as and his clients answers.
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Form 8867 part IV concerns
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The eligibility of a qualifying child of a non parent taxpayer, tiebreaker rules and possible consequences of another person claiming the child. Noncompliance=a no answer to any of the six questions in part IV.
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What must taxpayers and dependents have in order to apply for an earned income credit
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Both taxpayers and dependents must have valid SSN
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Earned income for EIC purposes includes earned income, union strike benefits, long term disability benefits received prior to minimum retirement age, self-employment, combat pay. It does not include
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Alimony
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