Study Guide - Earned Income Credit

The study guide is provided to guide you through the course material in a step by step format.

Course material is an online PDF document available immediately upon purchase.

Prerequisite: None

Course level: Basic

Advanced preparation: None

Teaching method: Online study and exam

Chapter 1 – Earned Income Credit Rules

The objective of this chapter is to review how to:

  • Recognize the EIC eligibility rules that apply to all taxpayers;
  • Identify the EIC eligibility rules applicable to taxpayers who have a qualifying child;
  • List the EIC eligibility rules that apply to taxpayers who do not have a qualifying child; and
  • Recognize how the EIC for which an eligible taxpayer qualifies is determined.

Chapter 2 – Earned Income Credit Errors

The objective of this chapter is to review how to:

  • Recognize the incidence of errors in claiming the earned income credit and their probable causes;
  • Identify the estimated impact of earned income credit errors on federal revenue;
  • List the most common earned income credit errors and their potential problem areas; and
  • Recognize the additional questions tax preparers need to ask if taxpayer-provided information appears incorrect, inconsistent or incomplete.

Chapter 3 – EIC Disallowance

The objective of this chapter is to review how to:

  • List the principal tools used by the IRS to verify the propriety of EIC claims and to prevent or recover improper EIC payments;
  • Identify the additional requirements imposed on taxpayers claiming the EIC following disallowance;
  • Recognize the exceptions applicable to the requirement that a taxpayer file IRS Form 8862 following disallowance of an EIC claim;
  • Determine the year in which an IRS Form 8862 must be filed to claim EIC after the IRS has disallowed it; and
  • Recognize the duration of the prohibition against filing for the EIC in the event a taxpayer’s EIC error is determined to be the result of reckless/intentional disregard of EIC rules or fraud.

Chapter 4 – EIC Due Diligence

The objective of this chapter is to review how to:

  • List the due diligence requirements a tax return preparer must meet when preparing a tax return claiming the earned income credit;
  • Recognize the records a tax return preparer is required to keep to support a client’s claim for the earned income credit;
  • Identify the penalties that may be imposed on a tax return preparer for failing to comply with due diligence requirements when preparing a client’s tax return claiming the earned income credit; and
  • Identify the sanctions that may be imposed on an employer whose employee fails to comply with EIC due diligence requirements.

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