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Other health care provider statement

If the parents file a joint return together and can claim the child as

Social services agency or program statement

a qualifying child, the child is treated as the qualifying child of both of

the parents.

Schedule C

If the parents do not file a joint return together but both parents

Business license

claim the child as a qualifying child, the child is treated as the

Forms 1099

qualifying child of the parent with whom the child lived for the longer

Records of gross receipts provided by taxpayer

period of time during the year. If the child lived with each parent for

Taxpayer summary of income

the same amount of time, the child is treated as the qualifying child

Records of expenses provided by taxpayer

of the parent who had the higher adjusted gross income (AGI) for the

Taxpayer summary of expenses

year.

Bank statements reconstruction

If no parent can claim the child as a qualifying child, the child is

treated as the qualifying child of the person who had the highest AGI

Line 6

for the year.

If your client’s return is selected for audit, the IRS may ask your

If a parent can claim the child as a qualifying child but no parent

client to provide documents to show eligibility for, and the amount of,

does so, the child is treated as the qualifying child of the person who

the credit(s) claimed on the return or claim for refund. The credit(s)

had the highest AGI for the year, but only if that person's AGI is

may not be allowed without this information. You can help your

higher than the highest AGI of any of the child’s parents who can

clients be prepared to answer questions about their eligibility for the

claim the child.

credit(s) claimed and the correctness of the amount of the credit(s)

Subject to the rules just described, the taxpayer and the other

claimed if you help them understand that the IRS may ask for

person(s) may be able to choose which of them treats the child as a

underlying documentation regarding eligibility for and the

qualifying child. If the taxpayer allows another person to treat the

computation of the amount of the credit(s).

child as a qualifying child, the taxpayer is not eligible to claim EIC for

the same child. Also, EIC claims must be consistent with claims for

Line 7

other credits and child-related benefits, such as the dependency

exemption. For examples and details, see Pub. 596.

Unless an exception applies, if the EIC claimed in a prior year was

denied for a reason other than a clerical or math error, a claim for the

In many cases, the taxpayer should be able to tell you whether

EIC on the taxpayer’s 2016 return will be denied unless Form 8862

his or her AGI is higher than the AGI of the child’s parents or other

is attached to the return. See the Form 8862 instructions and Pub.

person who might also claim the child.

596 for more information.

Due Diligence Questions for Returns

Note. As a result of recent tax law changes, Form 8862 must be

Claiming the CTC/ACTC

attached to a taxpayer’s 2017 return if the CTC/ACTC and/or the

AOTC is reduced or disallowed on the taxpayer’s 2016 tax return for

As a paid tax return preparer you must exercise due diligence to

a reason other than a clerical or math error.

determine whether a taxpayer meets all of the eligibility

requirements for the CTC/ACTC. Lines 10a, 10b, and 10c only ask

Line 8

three specific questions about eligibility for the CTC/ACTC.

However, your client must meet all of the eligibility requirements for

The EIC, the CTC/ACTC and the AOTC are determined using

claiming the CTC/ACTC. Therefore, your client cannot claim the

information, that includes information about the kind and source of

CTC/ACTC if all of the eligibility requirements for these credits are

income reported on a taxpayer’s return. For self-employed

not satisfied, regardless of the answers to the questions on line 10.

individuals, this information is generally reported on Schedule C

(Form 1040) as income from self-employment. To exercise due

Line 10

diligence when determining eligibility for, and the amount of, the EIC,

the CTC/ACTC, or the AOTC for a self-employed individual, you

If the taxpayer is the custodial parent of the child claimed for the

may also be required to ask additional questions to determine

credit, and he or she has completed Form 8332 or signed a similar

whether the Schedule C is correct and complete. Additional

document containing the same information, releasing a claim to

guidance on Schedule C and the EIC is available as part of the EIC

exemption for the child in question, he or she is not entitled to claim

Tax Preparer Toolkit at

the CTC/ACTC.

If the taxpayer is not reporting self-employment income on

If the taxpayer is the noncustodial parent and has a Form 8332

Schedule C, leave this line blank. Do not check any of the boxes on

(or equivalent document) signed by the custodial parent, be sure to

this line.

ask if there is a more recent form revoking the release of the

Specific Due Diligence Questions for

exemption. See the instructions for Form 8332 for more information.

Returns Claiming the EIC

Due Diligence Questions for Returns

Claiming the AOTC

As a paid tax return preparer, you must exercise due diligence to

determine whether a taxpayer meets all of the eligibility

As a paid tax return preparer you must exercise due diligence to

requirements for the EIC. Although lines 9a and 9b only ask two

determine whether a taxpayer meets all of the eligibility

specific questions related to claiming a qualifying child for the EIC,

requirements for the AOTC. Although line 11 only asks about

your client must meet all of the eligibility requirements for claiming

substantiation of qualified tuition and related expenses, your client

the EIC. Therefore, your client may not claim the EIC if all of the

may not meet all of the eligibility requirements for claiming the

eligibility requirements for the EIC are not satisfied, even if you

AOTC. Therefore, your client cannot claim the AOTC if all of the

answer “yes” to questions 9a and 9b.

eligibility requirements for the AOTC are not satisfied, even if you

answer “yes” to the question on line 11.

Line 9

If your client is eligible to claim the EIC for taxpayers without a

Line 11

qualifying child, answer “yes” to questions 9a and 9b.

Only qualified tuition and related expenses taken into account.

For purposes of claiming the AOTC, only qualified tuition and related

Line 9a

expenses may be taken into account to determine the amount of the

credit a taxpayer may claim. Qualified tuition and related expenses

Tiebreaker rules. These rules determine if a taxpayer may claim a

are tuition and certain related expenses required for enrollment or

child as a qualifying child for the EIC when the child meets the

attendance at an eligible educational institution. For more

definition of a qualifying child for more than one person.

information on determining when tuition and expenses meet the

If only one of the persons is the child's parent, the child is treated

definition of qualified tuition and related expenses, see Pub. 970.

as the qualifying child of the parent.

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Instructions For Form 8867 - Paid Preparer'S Due Diligence Checklist For The Earned Income Credit (Eic), The Child Tax Credit (Ctc)/additional Child Tax Credit (Actc), And/or The American Opportunity Tax Credit (Aotc) - 2016 Page 3

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