Earned Income Tax Credit

Course Description:

This course examines the earned income credit rules, the common errors made in claiming the credit, the consequences of its disallowance by the IRS and the requirements imposed on tax return preparers for earned income credit due diligence. The course discusses the rules applicable to everyone, the rules applicable only to individuals with a qualifying child and the rules that apply only when the taxpayer has no qualifying child.  The requirements for tax return preparer due diligence are examined and best practices are identified. 

• • 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.
• • 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.
• • 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 8862 following disallowance of an EIC claim;
• • Determine the year in which an IRS Form 8862 must 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.
• • 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.

Course Number: PW505
NASBA Field of Study: Taxes
Level: Overview
Author/Instructor: Paul Winn
Publication Date: January 2025
CPE Credits: 3
Prerequisites: None
IRS Program Number: XW9MP-T-01827-25-S

CPE Solutions, LLC is listed as a registered sponsor with the California Tax Education Council. To confirm, you may visit the CTEC Board website by clicking here
Our provider number is 3063
CTEC Course number: 3063-CE-00826
Federal Tax Law hours: 3 
California Tax Education Council P.O. Box 2890 Sacramento, CA 95812-2890 Phone: 877-850-2832