Individual Income Tax Credits & Due Diligence Requirements

Individual Income Tax Credits and Due Diligence Requirements examines the income tax credits available to individual taxpayers. In so doing, this 5 chapter course looks at both the refundable and nonrefundable credits and discusses the nature of the credits, their eligibility requirements, timing, limitations, phase-outs (where appropriate), whether the credit may be carried over, the nature of any qualified expenses, and how they are calculated.
The tax credits considered include the:

• Additional Child Tax Credit
• Energy Efficient Home Improvement Tax Credit;
• Adoption Credit;
• Federal fuel tax credit;
• American Opportunity Tax Credit;
• Health Insurance Premium Tax Credit;
• Child And Dependent Care Credit;
• Lifetime Learning Credit;
• Child Tax Credit;
• Mortgage Interest Credit;
• Credit for Other Dependents
• Residential Clean Energy Tax Credit;
• Earned Income Tax Credit;
• Residential Energy Credit; and
• Electric Vehicle Tax Credit
• Retirement Savings Contribution Credit.

The final chapter focuses on the due diligence requirements applicable to tax preparers and examines the:

• Four basic principles of due diligence;
  – Having the appropriate knowledge,
  – Computing the credit(s),
  – Preparing and submitting Form 8867, Paid Preparer’s Due Diligence Checklist, and
  – Keeping appropriate records;
• Most common errors encountered;
• Tips on addressing incomplete, inaccurate and inconsistent client claims;
• Penalties on taxpayers for reckless and fraudulent claims;
• Sanctions that may be applied for a failure to be diligent; and
• IRS Education and Compliance Actions.

Of the 161,336,659 federal income tax returns received in 2023 (2022 income) by the IRS, 61,831,870 taxpayers—about 38%—claimed one or more federal income tax credits amounting to a total of $154.8 billion. For a tax preparer that prepares 150 to 200 tax returns in a season, the numbers indicate that he or she is likely to encounter between 55 and 75 returns claiming income tax credits that average approximately $2,500.