The Earned Income Credit (EIC) is a critical aspect of tax filing, yet it's often fraught with complexities and errors that can lead to IRS disallowances and penalties. This course, Inside the Earned Income Credit, directly addresses these challenges. Designed for tax professionals, it dives into the intricate rules of EIC, highlighting common errors and their consequences. The course elucidates EIC eligibility for all taxpayers, those with qualifying children, and taxpayers without qualifying children. We will also explore the rigorous due diligence requirements for tax return preparers, emphasizing best practices to avoid common pitfalls. By understanding these complexities, you'll be equipped to accurately claim EIC for clients, minimizing errors and the risk of IRS disallowance. This course is not just about problem identification; it offers practical solutions and strategies to enhance compliance and accuracy in EIC claims, ultimately safeguarding both you and your clients from potential penalties.
Learning Objectives
After completing this course, you will be able to:
Chapter 1
Recognize the EIC eligibility rules that apply to all taxpayers;
Identify the EIC eligibility rules applicable to taxpayers who have a qualifying child;
List the EIC eligibility rules that apply to taxpayers who do not have a qualifying child; and
Recognize how the EIC for which an eligible taxpayer qualifies is determined.
Chapter 2
Recognize the incidence of errors in claiming the earned income credit and their probable causes;
Identify the estimated impact of earned income credit errors on federal revenue;
List the most common earned income credit errors and their potential problem areas; and
Recognize the additional questions tax preparers need to ask if taxpayer-provided information appears incorrect, inconsistent or incomplete.
Chapter 3
List the principal tools used by the IRS to verify the propriety of EIC claims and to prevent or recover improper EIC payments;
Identify the additional requirements imposed on taxpayers claiming the EIC following disallowance;
Recognize the exceptions applicable to the requirement that a taxpayer file IRS Form 8862following disallowance of an EIC claim;
Determine the year in which an IRS Form 8862must be filed to claim EIC after the IRS has disallowed it; and
Recognize the duration of the prohibition against filing for the EIC in the event a taxpayer's EIC error is determined to be the result of reckless/intentional disregard of EIC rules or fraud.
Chapter 4
List the due diligence requirements a tax return preparer must meet when preparing a tax return claiming the earned income credit;
Recognize the records a tax return preparer is required to keep to support a client's claim for the earned income credit;
Identify the penalties that may be imposed on a tax return preparer for failing to comply with due diligence requirements when preparing a client's tax return claiming the earned income credit; and
Identify the sanctions that may be imposed on an employer whose employee fails to comply with EIC due diligence requirements.
Major Topics
Eligibility to Recieve EICEIC Rules Applicable to Everyone
EIC Rules That Apply Only if the Taxpayer has a Qualifying Child
Figuring the Amount of the Earned Income Credit
Incidence and Factors Leading to Earned Income Credit Errors
Common Earned Income Credit Errors
Claiming EIC after Disallowance
Client Consequences of EIC Disallowance
Tax Preparer Due Diligence a Statutory Requirement-IRC Section 6695
Failure to Meet Due Diligence Requirements
