Video instructions and help with filling out and completing Which Form 4797 Pub

Instructions and Help about Which Form 4797 Pub

One of the most important things on the IRS competency exam is your use as a tax preparer of the Earned Income Credit so I want to lead you guys through the form eighty eight sixty seven which is the paid preparers or an income credit checklist so basically this is the form that you're supposed to fill out every time you claim the Earned Income Credit related to certain cases in most cases you have to fill this out and attach it to the tax return okay so you can see here that this is the taxpayers name social security number so you're verifying this taxpayers eligibility to receive their Earned Income Credit look here on the front of the form where it actually has the preparers name and PTIN on the eighty eight sixty seven okay that's a major factor as a preparer IRS statistics show that up to 40 percent of audits are related to earn income credit so IRS is really looking to find out which preparers are submitting the most earned income credits that don't actually meet the criteria okay so important thing to realize right there as a tax preparer you have to identify this is the taxpayers filing status and married filing separately remember with earned income credit you cannot file married filing separately does the taxpayer have a social security number okay so II I see is only with the social security number for the taxpayer and also the the qualifying child okay so the dependent basically also s that was social this form 2555 is for foreign income you can't actually claim the I see if you are living abroad that's kind of what that's getting at on that line non-resident alien also same idea if you're not living in the u.s. you're not really eligible for an income credit for that year married filing jointly these are just qualification questions appear investment income more than three thousand one fifty so remember for EIC there's that disqualifying amount of investment income so dividends could be rental property if you have more than that amount of investment income then you're not eligible to receive in or earned income credit a qualifying child of another person no okay and you can see this form is not exactly easy to read but it'll have the eligibility information for the first child second child third child if applicable okay and it's trying to verify all of the eligibility criteria for the Earned Income Credit so that's relationship is number one okay and then live with the taxpayer in the US for over half the year that's that residency and then the age question so under age 19 and younger than the taxpayer so for instance younger brother can't claim an older brother for se in most cases generally speaking under age 24 and a full-time student okay that also meets the age criteria okay so it's basically just taking you through the various qualifying questions you can see how extensive this checklist is and you can see by how extensive the checklist is that IRS is really attempting to have you as the tax preparer verify that person's that taxpayer is eligibility for an income credit okay you can see these questions on the third page very similar just seeing if the taxpayer qualifies it has to be at least taxpayers of the least age 25 under 65 generally speaking to get an income credit okay and then our taxpayers earn income adjusted gross income less than the limit and that's basically the Earned Income Credit tables so that's that's asking you to use the tables to determine the Earned Income Credit okay this is very important as well for tax preparers this part for the due diligence requirements so I this is what IRS can find you 500 bucks for if they feel that you have not verified this information in this area of the form so did you complete form eighty eight sixty seven based on information provided by the tax payer or reasonably obtained by you so reasonably obtained did you complete the EIC worksheet okay most software programs obviously are gonna automatically create this EIC worksheet but they're just making sure that you're calculating the Earned Income Credit correctly did you comply with the knowledge requirements this is what something you really kind of need to pay attention to to comply with an alder parents you must not know or have reason to know that any information used to determine the taxpayers eligibility for and the amount of the IC is correct you may not ignore the implications of information furnished to or known by you and you must make reasonable inquiries if the information furnished appears to be incorrect inconsistent or incomplete okay and you're also supposed to document to some degree the responses you receive so this sounds definitely very aggressive type of language but really it's pertaining to you know if you know that the person doesn't qualify taxpayer doesn't qualify you know that they're claiming you know someone else's kids that don't live with them or or they're married and they're filing as single whatever it may be you need to realize that when you're signing off on the return you're making a statement that you know that the person is very eligible for EIC okay or more so that you don't know that they're not eligible okay and then you also have to keep some records so especially as a cellphone a tax preparer you need to be aware of what wreckers that you need to keep regarding claims for earning from credit so that's a lot to throw at you that's form eighty eight sixty seven it's a long form three pages and definitely very detailed this topic of Earned Income Credit eligibility is probably the number one topic on the entire IRS competency exam or are there as they're calling it now the