Why it matters
For a return filed in 2026 the penalty is $650 for each failure to include the form when required, so a return claiming four covered benefits can cost $2,600. The amount is adjusted for inflation, so confirm it before returns filed in 2027. The form does not replace the work: the IRS expects a documented interview, follow-up when answers look inconsistent, and records kept for 3 years. Mailing an omitted form separately does not change the penalty.
Example
A client with two children has Schedule C income, an earned income credit claim, the child tax credit and head of household status. The preparer interviews the client, copies the birth and school records relied on, and answers Questions 6-8 on Schedule C income and deductions. The firm keeps the form, the worksheets and its interview notes for 3 years. If the form were left off a return filed in 2026, the exposure would be $650 for each of the three claims.
Related terms
Questions about Form 8867
What records must a firm keep for Form 8867?
The IRS instructions list five: a copy of Form 8867, the worksheets for each credit claimed, copies of client documents you relied on, a record of how, when and from whom you got the information, and your questions with the client's answers. Keep them 3 years from the latest of the return due date (no extensions), the e-file date, or the date the return was presented or given for signature.
How is Form 8867 submitted with an e-filed or paper return?
For an e-filed return, submit it electronically with the return; e-file accepts up to four Forms 8867 per return. For a paper return, attach all of them to the return. A signing preparer who is neither e-filing nor mailing the return gives the completed form to the client to file with it.
Does Form 8867 apply to clients with a Schedule C business?
Yes when the return claims a covered benefit. Questions 6-8 ask whether the client has or can get records proving eligibility, whether a credit was disallowed in a prior year, and whether Schedule C income and deductions are correct. Ask for the books, bank statements and receipts behind the Schedule C figures and note what you reviewed.