Table of Contents

Course Learning Objectives

Introduction to The Course

Chapter 1 – Earned Income Credit Rules

Learning Objectives

Introduction

Eligibility to Receive EIC

EIC Rules Applicable to Everyone

Adjusted Gross Income Limits

Valid Social Security Number Required

Tax Filing Status

Citizenship or Residency

Foreign Earned Income

Investment Income

Earned Income

EIC Rules That Apply Only if the Taxpayer Has a Qualifying Child

Relationship, Age, Residence and Joint Return Tests

The Relationship Test

The Age Test

Student Defined

Permanently and Totally Disabled Defined

The Residency Test

Exception for U.S. Military Stationed Outside the U.S.

The Joint Return Test

Child Must Have Valid Social Security Number

Qualifying Child of More than One Person Rule

Tiebreaker Rules

Qualifying Child of Another Taxpayer Rule

EIC Rules That Apply if Taxpayer Does Not Have a Qualifying Child

The Age Rule

Death of Spouse During Year

The Dependent of Another Person Rule

The Qualifying Child of Another Taxpayer Rule

The Main Home Rule

Figuring the Amount of the Earned Income Credit

Calculating Earned Income for EIC Purposes

Taxpayers Not Self-Employed, Statutory Employees, Clergy or Church Employees

Self-Employed Taxpayers, Statutory Employees, Clergy and Church Employees

Summary

Chapter 1 Review Questions

Chapter 2 – Earned Income Credit Errors

Learning Objectives

Introduction

Incidence of Earned Income Credit Errors

Factors Leading to Earned Income Credit Errors

Estimated Revenue Impact of Earned Income Credit Errors

Common Earned Income Credit Errors

Earned Income Credit Errors Involving Qualifying Children

Qualifying Child Requirements

When a Child is Disabled

Avoiding Qualifying Child Earned Income Credit Errors

Earned Income Credit Errors Involving a Client’s Filing Status

Single Filing Status

Head of Household Filing Status

Married Persons Living Apart

Avoiding Filing Status Earned Income Credit Errors

Earned Income Credit Errors Involving Income Reporting

Avoiding Income Reporting Earned Income Credit Errors

Earned Income Credit Errors Involving Social Security Numbers

Avoiding Social Security Number Earned Income Credit Errors

Summary

Chapter 2 Review Questions

Chapter 3 - EIC Disallowance

Learning Objectives

Introduction

IRS Efforts to Reduce Improper EIC Payments

Claiming EIC after Disallowance

IRS Form 8862 Timing

Filing IRS Form 8862

Exceptions

Client Consequences of EIC Disallowance

Disallowance Due to Reckless or Intentional Disregard of EIC Rules

Disallowance Due to Fraud

Summary

Chapter 3 Review Questions

Chapter 4 - EIC Due Diligence

Learning Objectives

Introduction

Tax Preparer Due Diligence a Statutory Requirement – IRC §6695

Due Diligence Requirements

Eligibility Checklist – IRS Form 8867

Due Diligence Questions to Ask to Avoid Qualifying Child Errors

Eligibility Checklist Best Practices

EIC Computation

Computation Best Practices

Know the Law and the Client

When Should a Preparer Ask Additional Questions – Examples

Knowledge Requirement Best Practices

Record Maintenance

Record Maintenance Best Practices

Failure to Meet Due Diligence Requirements

Consequences for the Tax Return Preparer

Consequences for the Preparer’s Employer

Summary

Chapter 4 Review Questions

Answers to Chapter Review Questions

Chapter 1 Review Questions Feedback

Chapter 2 Review Questions Feedback

Chapter 3 Review Questions Feedback

Chapter 4 Review Questions Feedback

Appendix A – Worksheet A

Appendix B – Worksheet B

Glossary

Exam Score Sheet…………………………………………………………………………………………………....62

CPE Exam

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