TAS Tax Tips for Tax Pros: Earned Income Credit Tools and Information

April 12, 2019

Earned Income Tax Credit (EITC) rules are complex and helping clients claim this and other refundable credits is sometimes a challenge. That is especially true while performing the Due Diligence steps needed for returns you prepare and advising clients under audit circumstances.

Here are a few EITC quick reference tips, along with information on a new tool for assistance during EITC audit situations. There are also other links included which you may find useful when dealing with clients eligible to claim EITC or those who may have previously claimed the credit on their own.

New Tax Law

While there were no changes regarding eligibility for EITC under the Tax Cuts and Jobs Act, there were changes to other refundable credits, such as the Child Care Tax Credit (CTC), the Additional Child Tax Credit (ACTC) and the newly available nonrefundable credit for Other Dependents. There are new requirements for Social Security numbers for CTC and ACTC qualifying children, as well as increased phase-out limits.

Tax law changes involving these credits and many others can be found on the TAS Tax Reform Changes website. The website, available in English and Spanish, gives you a side-by-side comparison by tax topic of what’s changed and provides links to related publications.

Tools for Claiming EITC

There are a lot of resources for claiming this credit and how to do it accurately. Use the EITC Assistant, available in English and Spanish, to show your clients where they stand; they may think they qualify for EITC, but some may not meet all of the required qualifications to claim the credit. The Tax Return Preparer Toolkit is another great resource, as well as the interactive application "Am I Eligible to Claim an Education Credit?" or, "Is My Child a Qualifying Child for the Child Tax Credit?". Be sure to review Learn how to avoid the most common EITC, CTC/ACTC and AOTC errors before claiming this credit.

New Tool for EITC Audits

There’s a new tool designed to help you provide guidance to your clients undergoing an EITC audit from the IRS. The Form 886-H-EIC Toolkit guides you through identifying what documents need to be provided to the IRS. This new tool can help you give your clients the direction they need on what to do next. If you still need more information on EITC-related audits, see the EITC Document Checklist, I Received a Letter from IRS about My Credit; What Should I Do?, Guide to Everything Earned Income Tax Credit Online, or TAS’s Get help Claiming the EITC.

Due Diligence Requirements

You may or may not have heard that there is a newly revised Form 8867, Paid Preparer's Due Diligence Checklist, and instructions. If you haven’t taken a course recently, visit the Preparer Due Diligence page where you can take the EITC Due Diligence Training Module online. You can also watch the Tax Reform Due Diligence Requirements webinar. You’ll want to be sure to review IRS’s Handling the Most Common Errors for EITC and refundable credits page.

National Taxpayer Advocate Blog

The National Taxpayer Advocate, Nina E. Olson, has a blog in which she provides tax analysis on a variety of topics. Subscribe today to receive the latest NTA Blog updates. Previous blog topics include: The IRS Might Recover EITC Using Its Newly Discovered Post-Processing Math Error Authority, but Is It Constitutional?, TAS Research Shows that Education Improves EITC Compliance and many more views on this topic and a variety of others.

Other TAS and IRS Resources