Tax preparer due diligence checklist for Form 8867
Form 8867 is only the last step. The IRS also expects knowledge, meaning follow-up questions when facts look wrong, and records of what the client told you and showed you. This list is grouped by the credit or status that triggers the form, so you can send the client only the sections that apply to their return.
Who sends itSent by the preparer to a client whose tax year 2026 return, filed in 2027, is likely to claim the EITC, a child-related credit, the AOTC or head of household. Send it at intake, before you start the return.
Reviewed November 9, 2026 · 29 items
0 of 29 ticked
01Before you start the return
02Earned income credit
03Child tax credit and other dependents
04Divorced or separated parents
05American opportunity credit
06Head of household
07Your file and retention
What firms get wrong
Treating Form 8867 as the due diligence and not asking the follow-up questions, which lines 3 and 4 say you must make and document.
Copying last year's dependents and addresses forward when Form 8867 line 1 says to use information for the tax year of the return.
Using the Form 1098-T box amounts as the AOTC expenses without checking what was actually paid.
Claiming a child for a noncustodial parent with no Form 8332 or similar signed release in the file.
Skipping Form 8862 when a prior-year credit was denied for a reason other than a math or clerical error.
Quoting tax year 2025 credit amounts to a client for a 2026 return before you check the 2026 figures.
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Questions about this checklist
Which returns need Form 8867?
A paid preparer completes Form 8867 for any return or amended return that claims the EIC, the CTC, ACTC or ODC, the AOTC, or head of household status. The client does not complete it. It is filed with the return, and a return claiming several items needs the checks for each one.
What is the penalty for a due diligence failure?
For a return filed in 2026, the IRS instructions state $650 per failure, for each of the four credits or head of household status, so $2,600 if all four are involved. The amount is adjusted for inflation, so confirm the figure for returns filed in 2027 before you quote it.
Is a client's word enough if they have no documents?
Not when the facts look incorrect, inconsistent or incomplete. Form 8867 lines 3 and 4 ask whether you made reasonable inquiries and documented them. Write down the question, the answer and the date, and ask for a document where one exists.
What is the real cost of an unsupported child on the EITC?
For tax year 2025 the maximum EITC is $4,328 with 1 qualifying child and $7,152 with 2, a difference of $2,824. A second child with no residency proof puts that amount, and your penalty exposure, on the line.
How can a client send this list without a login?
In Usual a client opens a personal link with no password, uploads documents, and a yes or no answer such as "Are you claiming a child?" can show or hide the follow-up items. Reminders stop when everything is in.