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The Internal Revenue Service has released a new due diligence checklist to assist professional tax preparers in 2014. The three-page Form 8967 is part of the IRS initi...ative to provide checklists to help improve the accuracy of returns. It is optional for 2013.


The new form asks 21 questions about each child claimed on a tax return. There are questions about residency, relationship to taxpayer, support, citizenship, adoption, id numbers, physical presence, and other criteria to establish eligibility for the Child Tax Credit. There are also nine references to other IRS Publications, pointing the preparer to the detailed guidance in order to answer each question correctly. No stone is left unturned on this beast of a form.


Since a portion of the Child Tax Credit is refundable, it’s a common area on the tax return for truth-stretching (i.e. fraud). Form 8967 provides a means for the preparer to document dependent status and ensure, to the best of his or her knowledge, an accurate credit claim. It could definitely prove to be valuable in the event of an IRS audit – and woe be to preparers who have difficulties with returns and do not have proper documentation on file.

Recent due diligence documentation has included the expansion of the EIC checklist, Form 8867, to four pages (there are stiff penalties for not filing this form when required); the addition last year of a page 2 to Form 8863, which included more fact-checking questions to validate claims for education credits; and the addition of more questions on page 1 of Form 8812 – Child Tax Credit.