Mastering Tax Due Dilligence With Accuracy

Play an AI-generated podcast conversation about this lesson

Which of the following is a requirement for a qualifying child for the ODC?

Must be under the age of 19 at the end of the year (correct)

Must be a full-time student

Must be permanently and totally disabled

Must be younger than your client

Which of the following relationships would qualify a person as a qualifying relative for the ODC?

Grandparent

Cousin

Niece

Stepchild (correct)

Which of the following is a test that a qualifying relative for the ODC must meet?

Marital status test

Gross income test (correct)

Age test

Citizenship test

According to the text, who completes more than half of the Form 1040 returns claiming earned income tax credit (EITC), child tax credit/additional child tax credit/credit for other dependents (CTC/ACTC/ODC), American opportunity tax credit (AOTC) and head of household (HOH) filing status?

Tax Professionals Signup and view all the answers

What penalty did Congress enact for paid preparers who do not meet the due diligence requirements for EITC, CTC/ACTC/ODC, AOTC, and HOH?

Due Diligence Penalty Signup and view all the answers

Which tax credits were included in the due diligence penalty by the Protecting Americans from Tax Hikes (PATH) Act?

CTC/ACTC/ODC and AOTC Signup and view all the answers

Which form should be completed and submitted to the IRS with every electronic or paper return or claim for refund, when claiming the EITC, CTC/ACTC/ODC, AOTC or HOH filing status?

Form 8867 Signup and view all the answers

Which section of the Internal Revenue Code (IRC) provides the penalty that can be assessed against a paid tax return preparer who fails to comply with due diligence requirements?

IRC § 6695(g) Signup and view all the answers

What is the penalty amount for each failure to comply with due diligence requirements for the EITC, CTC/ACTC/ODC, or AOTC?

$560 Signup and view all the answers

Which part of Form 8867 helps ensure the consideration of due diligence requirements for each return or claim for refund?

Part I Signup and view all the answers

Which of the following is NOT a requirement for a child to qualify for the CTC/ACTC?

The child must be under the age of 17 Signup and view all the answers

Which of the following is NOT a requirement for a child to qualify as a dependent for the ODC?

The child must be under the age of 17 Signup and view all the answers

If a child does not have a valid SSN for employment, but meets all other requirements for the CTC/ACTC, they may be eligible for the:

Other Dependent Credit (ODC) Signup and view all the answers

If a client can be claimed as a dependent by another taxpayer, can they claim the CTC/ACTC?

No, they cannot claim the CTC/ACTC Signup and view all the answers

Which of the following is NOT a common error to avoid when preparing tax returns?

Claiming AOTC for a student for whom qualifying post-secondary education expenses were not paid, or considered paid, by the student Signup and view all the answers

Which of the following is a requirement for a child to be considered a qualifying child for the EITC?

Having a valid social security number (SSN) Signup and view all the answers

What is the age requirement for a child to be considered permanently and totally disabled for the EITC?

Any age Signup and view all the answers

When can a child file a joint return and still be considered a qualifying child for the EITC?

If the child is claiming a refund of withholding or estimated tax paid Signup and view all the answers

Which of the following is NOT a requirement for paid preparers to exercise due diligence?

Knowing that any information used to determine eligibility for a credit is incorrect Signup and view all the answers

Under what circumstances can a firm employing a paid preparer be penalized for failure to exercise due diligence?

If the firm disregarded its reasonable and appropriate compliance procedures in the preparation of the return or claim for refund Signup and view all the answers

What is one step that employers can take to establish reasonable and appropriate procedures for due diligence?

Reviewing current office procedures to make sure they address all appropriate due diligence requirements Signup and view all the answers

Why is understanding the eligibility requirements for each credit and HOH filing status important for paid preparers?

To prepare correct returns Signup and view all the answers