Know the Questions to Ask about Refundable Credits

Know the questions to ask to help your client's get the most out of Education Tax Benefits and Child-related Tax Benefits. And, ask each client all the questions every year. Family dynamics change and just because they qualified last year, doesn't mean they will this year. Or, things could have changed and this year they qualify. So don't miss any tax savings or refundable credits for your client.

Basics

  • Ask for the child's date of birth or verify it if you use a client intake sheet. If you rely on the child's birth certificate to complete the return and you are a paid preparer make sure to keep a copy of the birth certificate if your client claims EITC.

 

  • If over 19, ask how many months the child was in school.

 

  • Verify the relationship. If not the parent, ask where the parents are and why the parents are not claiming. Explain the tie breaker rules when necessary.

 

  • Ask how long the child lived in the same home as your client. Did anyone else live in the same home? Did the child live with anyone else for part of the year? Explain the tie breaker rules when necessary.

 

  • Verify Social Security numbers, ATINs and ITINs. If you rely on the Social Security card to prepare the return and your client claims EITC, be sure to keep a copy for your records.

 

Permanently and Totally Disabled

  • IRS defines permanently and totally disabled as:

     

    • Not being able to engage in any  substantial gainful activity because of a medically determinable physical or mental condition; and
    • A physician must certify the condition has lasted or is expected to last continuously for at least 12 months or to result in death.

 

  • To prove permanent and total disability, IRS asks for a letter from the child's doctor, other healthcare provider or any social service program or government agency verifying the child is permanently and totally disabled. Remember, you need to keep a copy of any documents you review if you use the information to determine EITC eligibility.

 

 Income

  • I have your W-2 from x employer or xx employers, do you have any other income such as interest, dividends or from running your own business that we haven't talked about?

  • See our EITC Schedule C and Record Reconstruction Training for interview tips for self-employment income and for help on reconstructing business records
    .

Marital Status

  • Don't assume the child is not married: regardless of age, always ask. Are any of your children married? I don't think so, but I have to ask if your child is married or not.

 

Support Test

  • It must be hard to support a family of x amount on this amount of income. Did anyone else help support this child? Did you receive help from any government agency or social organization? Or, did you receive outside support for this child? Or, did your child work or provide any of his or her own support?

Student Status

  • Verify the student can claim his or her own personal exemption or that the person claiming the student can. It is difficult to verify if dependent students filed their own returns and claimed their personal exemption. But, warn your clients when they are not sure if someone else claimed the exemption of the possible consequences.

 

  • Ask how long the student attended a post-secondary school. Ask how many courses the student is taking? Ask what the school considers full-time. Verify the school term. Ask the student's enrollment status, undergraduate or graduate. If the student is taking graduate studies, ask when he or she started graduate studies.

 

  • Ask enough questions until you feel comfortable the student qualifies and let your clients know if the IRS audits them, they need to have documents supporting their claim. See the Form 866-H-AOC , 866-H-AOC-MAX for examples of the documentation needed. Also available in Spanish, Form 886-H-AOC (SP).

 

More Tips for Interviews

 

 

Find the latest news for refundable credits on Hot Topics for Refundable Credits

Find out the qualifications for Education Credits

See the AOTC, the LLC and the Tuition Deduction criteria side by side on our Compare Education Credits and Tuition and Fees Deduction chart 

Whether you are involved in education, interact with students or parents of students or are a tax return preparer, find out What You Need to Know about AOTC and LLC

Whether you are a social or civic organization, a government office or agency, a county or municipal agency or a tax return preparer, find out What You Need to Know about CTC and ACTC

What other resources do we have for you? Check out the EITC Central and Other Refundable Credits welcome page 

 

 

 

 

 

Page Last Reviewed or Updated: 23-Apr-2014