What is Form 8867?

The due diligence regulations require a paid tax return preparer to complete and submit Form 8867, Paid Preparer's Due Diligence Checklist, with each 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.

Form 8867 shows you some factors to consider, but completing the form is not a substitute for performing all the required due diligence actions when determining a client’s eligibility for each credit or HOH filing status, or computing the amount of each credit. See the Instructions for Form 8867 for more information. 

 

How to Meet the Due Diligence Requirements for Form 8867

For every tax return or claim for refund you prepare claiming the EITC, CTC/ACTC/ODC, AOTC or HOH filing status, you must:

  • Complete Form 8867 based on information provided to you by the taxpayer or information you otherwise reasonably obtain or know.

And, you must either:

  • Electronically file the completed Form 8867 with each return or claim for refund you file electronically, or
  • Provide the completed Form 8867 to your client for inclusion with each return or claim for refund not filed electronically, or
  • Provide the completed Form 8867 in either electronic or paper format to the signing preparer for inclusion with each return or claim for refund if you are a nonsigning preparer.

IRS can assess a penalty against a paid preparer or a firm employing a paid preparer for not completing and submitting Form 8867 with a return or claim for refund claiming any of the above tax benefits. The penalty for returns or claims for refund submitted in 2021 is $540 for each failure to include the form when required. The penalty amount is adjusted annually for inflation.

 

Parts of Form 8867

Question What must be addressed

1

  • Complete the return based on information from your client or information you reasonably obtained or knew

Note: You can answer “yes” to question 1 even if you used information for the prior tax year as a result of your eligible client electing to use their prior year earned income to figure the EITC or ACTC or both credits. 

Question What must be addressed

2 - 4

  • Compute the credits and complete all applicable credit worksheets, forms and schedules
  • Interview the client, make a record of your questions and the client’s responses, and review information to determine eligibility for each credit or HOH filing status and the amount of each credit
  • For any information that appeared incorrect, inconsistent or incomplete, make a record of your reasonable additional inquiries, the responses received and the impact of the information on the credits or HOH

 

Question What must be addressed

5

  • Keep copies of required items, and list any documents you relied on
Question What must be addressed

6 - 8

  • Whether your client has or can get records to prove eligibility, whether any credit was disallowed in a prior year and if applicable, whether the income and deductions on Schedule C are correct

 

Question What must be addressed

9 - 12

  • Specific eligibility questions for the EITC and CTC/ACTC/ODC  
Question What must be addressed

13

  • Specific documentation questions for the AOTC                          

 

Question What must be addressed

14

  • Specific eligibility question for HOH fling status                           
Question What must be addressed

15

  • Preparer's certification that your answers are true, correct and complete

 

Tips on completing Form 8867

If you provide your client a paper tax return or claim for refund to send to IRS, attach the completed Form 8867 to the return. Stress the importance of your client including Form 8867 with the return sent to the IRS.  

The form doesn't address all the eligibility requirements for each tax benefit. The IRS has developed tools, publications and forms to help you.

For the EITC, try Publication 3524, EITC Eligibility Checklist, (Also available in Spanish) or Publication 596, Earned Income Credit, Also available in Spanish), to help you determine eligibility.

For the CTC or the ACTC, try the interactive tax assistant Is Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents? or Publication 972, Child Tax Credit.

For the AOTC, try the interactive tax assistant, Am I Eligible to Claim an Education Credit? or Publication 970, Tax Benefits for Education.

For HOH filing status, try Publication 501, Dependents, Standard Deductions and Filing Information

To show your clients how to verify their claim for the EITC, CTC/ACTC/ODC, AOTC or HOH filing status, see, Forms 886 Can Assist You.

What if Form 8867 is Missing from a Return or Claim for Refund?

If you submit a return or claim for refund claiming the EITC, CTC/ ACTC/ODC, AOTC or HOH filing status without Form 8867, don't send us the form separately.  Doing so has no effect on a potential penalty assessment.

If Form 8867 is not included with returns as required, you may get an alert with your e-File acknowledgements or a warning letter during the filing season.  

  • Acknowledgement alerts are sent electronically to preparers who e-File returns without the required Forms 8867.
  • Letters 5364, Missing Forms 8867, are sent to preparers who submit paper returns without the required Forms 8867.

What Should I Do if I Receive an Alert or Warning for Missing Forms 8867?

  • Don't ignore it.
  • Change your procedures to ensure Form 8867 is completed and submitted with every return or claim for refund claiming the EITC, CTC/ACTC/ODC, AOTC or HOH filing status.
  • Make sure your return preparation software includes Form 8867. Software products intended for individual return preparation don't include the form.
  • For returns submitted electronically, make sure the Form 8867 setting on your software is not disabled. For paper returns, make sure your clients know the importance of submitting Form 8867 when they file the return or claim for refund.

If we continue to receive EITC, CTC/ACTC/ODC, AOTC or HOH filing status returns or claims for refund prepared by you that are missing the Forms 8867, we may also send you Letter 1125, Transmittal of Examination Report, with Form 5816, Report of Tax Return Preparer Penalty Case, assessing due diligence penalties against you.

What if I Don't Agree with the Penalties?

See Appeal of Due Diligence Penalties

 

 

Return to Main Preparer Due Diligence Page