The United States residents have to pay various taxes every year, and some related documents can be too complicated to fill out. In such cases, professionals come to help; they are also called paid preparers.
These people have a lot of knowledge about multiple forms issued by the US Internal Revenue Service (or IRS). With the information given by a client, a preparer will quickly deal with any complex template needed.
However, not every taxpayer who uses the preparer’s services knows that professionals sometimes need to accompany their clients’ documents with additional forms where they answer questions about their work with clients. By these forms, preparers ensure that they have interviewed the client and made a truthful tax return for them.
If a client requests specific credits, a preparer must add IRS Form 8867 to the client’s tax return, also called “Due Diligence Checklist,” where the preparer replies to various questions and verifies that the client can ask for a credit.
The Service expects that every specialist who files the document gives honest answers and correct information. Misbehavior with tax forms or misuse of data related to the topic may lead to catastrophic consequences, and preparers, of course, are aware of that. Further, we will touch on the topic of penalties a specialist may get for not submitting the above-mentioned form.
Only those who work as paid preparers dealing with tax forms must provide the document. Moreover, it is required in specific cases when a client in their return asks for a refund or claims specific credits. Among them are:
These are the only cases when preparers should complete the form and file it. It is usually submitted with their customers’ tax returns.
As a preparer, you have to conduct an interview with your customer where they should answer your questions honestly. In the form, you will be asked about communication between you and your customer during tax return preparation. You will also need to answer if there was any incorrect information from your customer, whether the customer can aspire to the credit they claim or not, and many other questions.
All preparers who deal with tax forms on a regular basis for a long time now probably know how IRS Form 8867 looks like. If you are yet an inexperienced worker who needs some tips and a general idea of the form’s content, read our brief guide below. It will explain the document’s structure, and information filers must provide.
Although we have included the guide in this review, it is important that you go to the Service’s site and find their instructions there. All form filers must be guided by these instructions first and foremost, especially tax professionals and paid preparers.
Get the Form
As you might already know, each document has its instructions, rules, and template. You must ensure that the template you are filling out was issued this year. Check the year on the form’s first page before completing it.
If you need a guarantee that the form you plan to use will work, we recommend using our form-building software to download the template easily. Besides IRS Form 8867, we offer many other legal templates one may seek. Another way to get the right form is to go to the Service’s official webpage.
Identify Your Client and Yourself
You have to introduce your client (the Service will consider them a taxpayer, of course) and yourself as a preparer who has created and submitted your client’s documents.
Enter the client’s name and ID number as written in their tax return. Below, write your full name and PTIN (preparer tax identification number).
Choose the Credit
You have to select which credit your client has claimed in their form (EIC, HOH, AOTC, and others). Mark the relevant box and choose the applicable form’s part(s) to fill out.
Answer Multiple Questions
Then, you will see eight questions; most of them require a “yes or no” reply. Answer every question step by step, providing truthful details about working with your customer. If demanded, give additional information. Generally, all questions are about the information your customer has provided you with and various documents.
Complete the Applicable Part(s)
After all the questions are replied to, you have to choose the part to fill out, as we have mentioned before. For EIC, go to Part II; CTC, ACTC, or ODC require completing Part III; fill out Part IV for AOTC and Part V for HOH, respectively.
Again, all parts require simple answers: either yes or no. If your client has claimed several of those credits, fill out every relevant part.
Answer the Question in Part VI
You have to read the notice before answering the last question. When you have read and understood it all, verify all your answers by answering the question in line 15 and checking a suitable box there.
You have to add this form to your client’s tax return (one of these forms: 1040, or 1040-SR, or 1040-NR, or 1040-SS, or 1040-PR) or their claim for refund and pass all documents to your client, so they file all forms. Also, if you are responsible for the submission of all the documents, you can send the form by yourself (attach it to the return).
As well as with tax returns, it is possible to deliver the form either digitally or via physical post offices. In case you prefer regular mail, always remember to check the mailing address before you send the documents anywhere.
If you do not provide the Service with the form, the fine will follow; in 2021, it equals 540 US dollars. The sum changes every year because of inflation, as stated in the Service’s guide.