Question: When does the Due Diligence Checklist Load?
Answer: The checklist loads when the tax return includes the following credits:
- Earned Income Tax Credit (EITC)
- Child Tax Credit (CTC)
- American Opportunities Tax Credit (AOTC)
The Due Diligence checklist is not transmitted to the IRS with the electronic file for returns prepared in the VITA/TCE program. However, it does contain Qualifying questions that need to be answered to properly determine if the taxpayer qualifies for one of these credits based on their tax situation.
Tips for navigating through the checklist:
Questions that impact the Tax Calculations
In general the questions that ask “Did the Taxpayer or Did the Spouse” impact the calculation of the return and should be answered based on the tax situation. Below is an example:
The questions regarding the Qualifying Child(ren) for EITC impact the calculation of the return and should be answered based on the tax situation. Note: If this differs from the information you entered in the dependent section you may want to make the change in the Dependent information section.
Questions that DO NOT impact the Tax Calculations
TaxSlayer never penalizes the taxpayer by reducing a credit because a Due Diligence question is not answered in a manner that DOE NOT turn the buttons green on the Due Diligence checklist page. The questions are designed by the IRS to help ensure that all returns are prepared with as much quality and due diligence guidance as possible. Below are examples of questions that must be answered but DO NOT impact the tax calculations
EITC Specific questions that DO NOT impact the tax Calculations
01/12/2017: The following question DOES NOT impact the tax calculations, but will appear if there is a Schedule C in the return
Child Tax Credit Specific questions that DO NOT impact the tax Calculations
AOTC Specific questions that DO NOT impact the tax Calculations
Certification questions that DOES NOT impact the tax Calculations. Keep in mind that you are already reviewing all data and would not be preparing the return if you thought the information received was not accurate.
01/12/2017 Note: This is is wording directly from the Form. Volunteers are not required to keep documents and ARE NOT subject to any penalties. The goal of the strong language is for the IRS to promote proper due diligence and record keeping among the paid preparer community.
Blog Posted 01/08/2017 1:15 PM EST