8867 Instr

2020

Instructions for Form 8867

Department of the Treasury
Internal Revenue Service

Paid Preparer’s Due Diligence Checklist for the Earned Income Credit, American
Opportunity Tax Credit, Child Tax Credit (including the Additional Child Tax Credit
and Credit for Other Dependents), and/or Head of Household Filing Status
• If you are the paid tax return preparer signing the return and you
are mailing the return to the IRS for the taxpayer (which should only
be done after the taxpayer has reviewed and signed the paper
return), mail the completed Form 8867 to the IRS with the return.

Section references are to the Internal Revenue Code unless
otherwise noted.

Future Developments

For the latest information about developments related to Form 8867
and its instructions, such as legislation enacted after they were
published, go to IRS.gov/Form8867.

What’s New
Penalty. The penalty per failure to be diligent has increased to $540
for returns or claims for refund filed in 2021.

Reminders
Multiple Forms 8867. Multiple Forms 8867 may be submitted
electronically for one return. See Multiple Forms 8867 for one return,
later.
Childless Earned Income Credit (EIC). Your client may be able
to qualify for the EIC under the rules for taxpayers without a
qualifying child if your client has a qualifying child for the EIC who is
claimed as a qualifying child by another taxpayer. For more
information, see Pub. 596.
Social security number (SSN) required. Children identified by an
IRS individual taxpayer identification number (ITIN) or adoption
taxpayer identification number (ATIN) no longer qualify for the child
tax credit (CTC) or refundable additional child tax credit (ACTC). A
taxpayer must include on the tax return the required SSN for each
qualifying child for whom the CTC or the ACTC is claimed. However,
children without an SSN but with an ITIN or ATIN may still qualify for
the nonrefundable credit for other dependents (ODC).
Head of Household (HOH) filing status. For more information on
eligibility to claim HOH filing status, see Pub. 501.
American Opportunity Tax Credit (AOTC). For information on
eligibility for the AOTC, see Pub. 970

General Instructions
Form 8867 covers the EIC, the CTC/ACTC/ODC, the AOTC, and/or
HOH filing status. You should check the boxes corresponding to all
benefits actually claimed on the return that you prepared.
Only paid tax return preparers should complete this form. If
you were paid to prepare a return for any taxpayer claiming the EIC,
the CTC/ACTC/ODC, the AOTC, and/or HOH filing status, you must
complete Form 8867 and meet the other due diligence requirements
described later in Purpose of Form.
Form 8867 must be filed with the return. Form 8867 must be
filed with the taxpayer’s return or amended return claiming the EIC,
the CTC/ACTC/ODC, the AOTC, and/or HOH filing status.
Signing tax return preparers.
• If you are the paid tax return preparer signing the return and you
are filing the return electronically, file the completed Form 8867
electronically with the return.
• If you are the paid tax return preparer signing the return and you
are not electronically filing the return, or mailing the return to the IRS
for the taxpayer, provide the completed Form 8867 to the taxpayer
with instructions to file this form with his or her return.

Oct 23, 2020

Nonsigning tax return preparers. If you are the paid tax return
preparer for any of the credits and/or HOH filing status covered by
Form 8867, but you are not required to sign the return as preparer,
provide the signing tax return preparer the completed form in either
electronic or paper format.
You can find rules regarding who is a signing tax return preparer
and a nonsigning tax return preparer in Regulations section
301.7701-15. If you are the only paid tax return preparer for the
taxpayer’s return, you are the signing tax return preparer and must
sign the return as preparer. Failure to sign the return when required
may subject you to a penalty.
Multiple Forms 8867 for one return. Form 8867 must be
completed by a paid tax return preparer responsible for a taxpayer's
claim of the EIC, the CTC/ACTC/ODC, the AOTC, and/or HOH filing
status; therefore, there may be multiple Forms 8867 for one return or
amended return. If there are multiple Forms 8867 for a paper return,
attach all Forms 8867 to the return to be submitted to the IRS. If
there are multiple Forms 8867 for an e-filed return, e-file will accept
transmission of up to four Forms 8867. All Forms 8867 must be
retained as provided in Document Retention, later.
Example. Paid tax return preparer A determined taxpayer T's
eligibility for, and the amount of, the EIC claimed on T's return. Paid
preparer B determined T's eligibility for, and the amount of, the
AOTC claimed on T's return and also signs the return as the signing
tax return preparer. Two Forms 8867 must be completed, one
prepared by A for the EIC, and one prepared by B for the AOTC. The
Form 8867 completed by A as a nonsigning preparer must be
provided to B to be filed along with T’s return. The Form 8867
completed by B as the signing preparer should also be filed with T's
return.

Purpose of Form

As a paid tax return preparer, you are required to exercise due
diligence when preparing any client’s return or claim for refund. As
part of exercising due diligence, you must interview the client, ask
adequate questions, and obtain appropriate and sufficient
information to determine the correct reporting of income, claiming of
tax benefits (such as deductions and credits), and compliance with
the tax laws.
You must also meet specific due diligence requirements set forth
in Treasury Regulations when you prepare returns and claims for
refund involving the EIC, the CTC/ACTC/ODC, the AOTC, and/or
HOH filing status. To meet these due diligence requirements, you
may need to ask additional questions and obtain additional
information to determine your client’s eligibility to claim the credit(s)
and/or HOH filing status and to figure the amount(s) of any credit(s)
claimed. Failure to meet the due diligence requirements could result
in a $540 penalty for each failure. See section 6695(g) and
Regulations section 1.6695-2.
You will have complied with the due diligence requirements
set forth in Treasury Regulations for the EIC, the CTC/ACTC/
ODC, the AOTC, and/or HOH filing status claimed on a return
or claim for refund if you do all of the following.

Cat. No. 59407V

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1. Meet the knowledge requirement by interviewing the
taxpayer, asking adequate questions, contemporaneously
documenting the questions and the taxpayer’s responses on the
return or in your notes, reviewing adequate information to determine
if the taxpayer is eligible to claim the credit(s) and/or HOH filing
status, and to figure the amount(s) of the credit(s) claimed.
2. Complete Form 8867 truthfully and accurately and complete
the actions described on Form 8867 for any applicable credit(s)
claimed and HOH filing status, if claimed.
3. Submit Form 8867 in the manner required.
4. Keep all five of the following records for 3 years from the
latest of the dates specified later in Document Retention.
a. A copy of Form 8867.
b. The applicable worksheet(s) or your own worksheet(s) for
any credits claimed (see Due Diligence Requirements, later).
c. Copies of any documents provided by the taxpayer on which
you relied to determine the taxpayer’s eligibility for the credit(s)
and/or HOH filing status and to figure the amount(s) of the credit(s).
d. A record of how, when, and from whom the information used
to prepare Form 8867 and the applicable worksheet(s) was
obtained.
e. A record of any additional information you relied upon,
including questions you asked and the taxpayer’s responses, to
determine the taxpayer’s eligibility for the credit(s) and/or HOH filing
status and to figure the amount(s) of the credit(s).

As a paid tax return preparer, when determining the taxpayer’s
eligibility to claim a credit and/or HOH filing status and to determine
the amount of a credit claimed on a return or claim for refund, you
must not use information that you know, or have reason to know, is
incorrect. You may not ignore the implications of information
provided to or known by you, and you must make reasonable
inquiries if a reasonable and well-informed tax return preparer,
knowledgeable in the law, would conclude that the information
provided to you appears to be incorrect, inconsistent, or incomplete.
You must also contemporaneously document in your files any
reasonable inquiries made and the responses to these inquiries.
You must know the tax law for each credit and/or HOH filing
status claimed on a return or claim for refund you prepare and use
that knowledge to ask your client the right questions to get all the
relevant facts to determine your client’s eligibility to claim the
credit(s) and/or HOH filing status and to figure the amount(s) of any
credit(s) claimed.
Example 1. Taxpayer X engages Preparer C to prepare his
2020 federal income tax return. During the intake interview,
Taxpayer X states he is 25 years old, has never been married, and
has two sons ages 10 and 12. X also states that he was
self-employed, earned $12,000 from his lawn care business, and
had no business expenses or other income. Preparer C believes that
X may be eligible for the EIC and the ACTC. But the ages of the
children seem inconsistent with the age of the taxpayer. Additionally,
the taxpayer's claim that he has no business expenses seems
inconsistent with his income. Preparer C must exercise due
diligence to determine whether a credit can be claimed with respect
to the children and whether Taxpayer X meets the earned income
requirements to claim a credit. Because Preparer C is preparing
Taxpayer X’s return for the year, Preparer C would have been
required to exercise due diligence with respect to those items when
preparing the return, and if he or she made the appropriate inquiries
during that process, then no additional questions would be
necessary. However, if he or she did not previously ask about the
ages of the children and the income requirements, Preparer C is
required to make reasonable inquiries. Reasonable inquiries could
include the following.
• Are these your foster sons or adopted sons? If so, were the
children placed in your home for foster care by an authorized
placement agency or court order or were they lawfully placed in your
home for adoption?
• How long did the children live with you during 2020?
• If the taxpayer is not the parent, did any other relative also reside
with these children for more than half the year in 2020?
• How much did you charge to care for each lawn?
• Do you have records of the amount of money you received from
lawn work?
• Did you have any expenses for lawn mowing equipment, fuel, or
other supplies for your business? If not, how did you provide lawn
care services?
• How many lawns did you take care of?

Specific Instructions
Enter the taxpayer’s name as it appears on the return and enter the
taxpayer identification number (TIN) for the taxpayer (primary TIN, if
filing a joint return).
Enter the name and preparer tax identification number (PTIN) of the
paid tax return preparer who determined the taxpayer's eligibility to
claim the credit(s) and/or HOH filing status for which Form 8867 is
being completed and to figure the amount(s) of any credit(s)
claimed, even if the preparer is not the tax return preparer signing
the tax return.

Part I—Due Diligence Requirements

Complete questions 1–8 for all credits and/or HOH filing status for
which you were the paid tax return preparer determining the
taxpayer's eligibility for any credits for which you were the paid tax
return preparer who determined the amount of the credits claimed.

Line 1

You should prepare the 2020 return based on information related to
the 2020 tax year only. If you are preparing a late or amended return
or claim for refund, you should prepare the return based on the
information related to the tax year of the return or claim for refund.

Line 2

Preparer C must contemporaneously document these inquiries in
his or her files, along with the responses.

You must complete the applicable IRS worksheet for the EIC, the
CTC/ACTC/ODC, and/or the AOTC (or your own worksheet that
provides the same information), as well as all required forms and
schedules for each credit claimed on the return for which you are the
paid tax return preparer. You can find the worksheets for the EIC
and the CTC/ACTC/ODC in the Instructions for Forms 1040 and
1040-SR and in the Instructions for Form 1040-NR. The ACTC
worksheet can also be found in the instructions for Forms 1040-PR
and 1040-SS. You can find the AOTC worksheet in the Instructions
for Form 8863. Completion of these forms, schedules, and
worksheets assists you in determining the taxpayer’s eligibility for
the credit and the correct amount of the credit and is required under
the due diligence requirements set forth in Treasury Regulations. If
the taxpayer claimed HOH filing status and did not claim any of the
credits, check the “N/A” box.

Example 2. Assume the same facts as in Example 1, except
that Preparer C also prepared X's 2019 return and at that time he or
she was able to verify that the two boys are X's legally adopted
children. When preparing X's 2020 return, C is not required to make
additional inquiries to determine X's relationship to the two boys for
purposes of the requirement that a return preparer must not know, or
have reason to know, that a claim for the ACTC is based on false or
incorrect information.

Line 5

Keep copies of any documents provided by the taxpayer on which
you relied to prepare the return, determine the taxpayer’s eligibility
for the benefits, and figure the amount(s) of the credit(s). List the
documents provided by the taxpayer in the space provided. See
Document Retention, later, for more information on the due diligence
recordkeeping requirements. If you already requested documents
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If a taxpayer is not reporting self-employment income on
Schedule C, check “N/A.”

from the taxpayer to substantiate his or her eligibility for a tax credit
or HOH filing status as part of exercising due diligence when
preparing the return for the particular tax year, you do not need to
request those documents again.

Part II—Due Diligence Questions for
Returns Claiming EIC

The following are examples of documents that you may rely on to
determine a taxpayer’s eligibility to claim the credit(s), and/or HOH
filing status, and the amount(s) of any credit(s) claimed. This list is
not all-inclusive and none of these documents are specifically
required to demonstrate eligibility for the credits and/or HOH filing
status.

•
•
•
•
•
•
•
•
•

Line 9

As a paid tax return preparer, you must exercise due diligence to
determine whether a taxpayer meets all of the eligibility
requirements for the EIC. Although lines 9a, 9b, and 9c only ask
three specific questions related to claiming a qualifying child for the
EIC, all of the eligibility requirements for claiming the EIC must be
met. Therefore, your client may not claim the EIC unless all of the
eligibility requirements for the EIC are satisfied, even if you answer
“Yes” to questions 9a, 9b, and 9c.

Residency of a Qualifying Child
School records or statement.
Landlord or a property management statement.
Health care provider statement.
Medical records.
Child care provider records.
Placement agency statement.
Social service records or statement.
Place of worship statement.
Indian tribal official statement.

Line 9a. If your client is eligible to claim the EIC for taxpayers
without a qualifying child, answer question 9a and skip questions 9b
and 9c.
Line 9c—Tiebreaker rules. These rules determine if a taxpayer
may claim a child as a qualifying child for the EIC when the child
meets the definition of a qualifying child for more than one person. If,
under these rules, the taxpayer may not claim a child as a qualifying
child for the EIC, the taxpayer may be able to claim the EIC under
the rules for a taxpayer without a qualifying child. If the taxpayer is
not claiming the EIC for a child that is the qualifying child of more
than one person, check “N/A.”
• If only one of the persons is the child's parent, the child is treated
as the qualifying child of the parent.
• If the parents file a joint return together and can claim the child as
a qualifying child, the child is treated as the qualifying child of both of
the parents.
• If the parents do not file a joint return together but both parents
claim the child as a qualifying child, the child is treated as the
qualifying child of the parent with whom the child lived for the longer
period of time during the year. If the child lived with each parent for
the same amount of time, the child is treated as the qualifying child
of the parent who had the higher adjusted gross income (AGI) for the
year.
• If no parent can claim the child as a qualifying child, the child is
treated as the qualifying child of the person who had the highest AGI
for the year.
• If a parent can claim the child as a qualifying child but no parent
does so, the child is treated as the qualifying child of the person who
had the highest AGI for the year, but only if that person's AGI is
higher than the highest AGI of any of the child’s parents who can
claim the child.
Subject to the rules just described, the taxpayer and the other
person(s) may be able to choose which of them treats the child as a
qualifying child. If the taxpayer allows another person to treat the
child as a qualifying child, the taxpayer is not eligible to claim the
EIC for the same child. Also, generally, EIC claims must be
consistent with claims for other child-related benefits. For examples
and details, see Pub. 596.
In many cases, the taxpayer may be able to tell you whether his
or her AGI is higher than the AGI of the child’s parents or other
person who might also claim the child.

Disability of Qualifying Child

• Statement of medical doctor.
• Statement of other health care provider.
• Statement of social services agency or program statement.
Schedule C
Business license.
Forms 1099.
Records of gross receipts provided by taxpayer.
Taxpayer's summary of income or summary of income provided
by taxpayer.
• Records of expenses provided by taxpayer.
• Taxpayer's summary of expenses or summary of expenses
provided by taxpayer.
• Bank statements to show income and expenses.

•
•
•
•

Line 6

If your client’s return is selected for audit, the IRS may ask your
client to provide documents to show eligibility for the credit(s) and/or
HOH filing status claimed on the return or claim for refund and the
computation of the amount(s) of any credit(s) claimed. The credit(s)
and/or HOH filing status may not be allowed without this information.
You can help your clients be prepared to answer questions about
their eligibility for the credit(s) claimed and the correctness of the
amount(s) of any credit(s) claimed if you help them understand that
the IRS may ask for underlying documentation regarding eligibility to
claim the credit(s) and/or HOH filing status and the computation of
the amount(s) of any credit(s) claimed.

Line 7

Unless an exception applies, if the EIC, the CTC/ACTC/ODC, and/or
the AOTC claimed in a prior year was denied for a reason other than
a clerical or math error, a claim for the credit on the taxpayer’s 2020
return will be denied unless Form 8862 is attached to the return. See
the Form 8862 instructions for more information. If the taxpayer
claimed HOH filing status and did not claim any of the credits, check
the “N/A” box.

Part III—Due Diligence Questions for
Returns Claiming CTC/ACTC/ODC

Line 8

The EIC, the CTC/ACTC/ODC, and the AOTC are determined using
information that includes information about the kind and source of
income reported on a taxpayer’s return. For self-employed
individuals, this information generally is reported on Schedule C
(Form 1040) as income from self-employment. To exercise due
diligence when determining eligibility for, and the amount of, the
credit(s) for a self-employed individual, you may also be required to
ask additional questions to determine whether the Schedule C is
correct and complete unless you prepared the individual’s return
and/or Schedule C and already exercised due diligence at that time.
Additional guidance on Schedule C and the EIC is available as part
of the EIC Tax Preparer Toolkit at EITC.IRS.GOV.

As a paid tax return preparer, you must exercise due diligence to
determine whether a taxpayer meets all of the eligibility
requirements for the CTC/ACTC/ODC. Lines 10, 11, and 12 only ask
three specific questions about eligibility for the CTC/ACTC/ODC.
However, your client must meet all of the eligibility requirements for
claiming the CTC/ACTC/ODC. Therefore, your client may not claim
the CTC/ACTC/ODC unless all of the eligibility requirements for
these credits are satisfied, regardless of the answers to the
questions on line 12.

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result in a $540 penalty for each failure. For example, if you are paid
to prepare a return claiming the EIC, the CTC/ACTC/ODC, the
AOTC, and/or HOH filing status, and you fail to meet the due
diligence requirements for all of these credits, you could be subject
to a penalty of $2,160.

A taxpayer who claims the CTC or the ACTC must include
on the tax return the required SSN of each qualifying child.

CAUTION

Line 12

If the taxpayer is the custodial parent of the child claimed for the
credit and he or she has completed Form 8332 or signed a similar
document containing the same information, which released a claim
to exemption for the child, he or she is not entitled to claim the child
for the CTC/ACTC/ODC.
If the taxpayer is the noncustodial parent and has a Form 8332
(or equivalent document) signed by the custodial parent, you should
determine whether there is a more recent form or document
revoking the release of the claim to exemption for the child. See the
Instructions for Form 8332 for more information. If the taxpayer is not
claiming the credit(s) for a child of divorced or separated parents (or
parents who live apart), check “N/A.”

Document Retention

To meet the due diligence requirements for the EIC, the CTC/ACTC/
ODC, the AOTC, and/or HOH filing status, you must keep all of the
following records.
1. A copy of Form 8867.
2. The applicable worksheet(s) or your own worksheet(s) for
any credits that are claimed that are specified in Due Diligence
Requirements, earlier.
3. Copies of any documents provided by the taxpayer on which
you relied to determine the taxpayer’s eligibility for the credit(s)
and/or HOH filing status and to figure the amount(s) of the credit(s)
claimed.
4. A record of how, when, and from whom the information used
to prepare Form 8867 and the applicable worksheet(s) was
obtained.
5. A record of any additional information you relied upon,
including questions you asked and the taxpayer’s responses, to
determine the taxpayer’s eligibility for the credit(s) and/or HOH filing
status and to figure the amount(s) of the credit(s).

Part IV—Due Diligence Questions for
Returns Claiming AOTC

As a paid tax return preparer, you must exercise due diligence to
determine whether a taxpayer meets all of the eligibility
requirements for the AOTC and has paid the qualified tuition and
related expenses used to figure the AOTC. Although line 13 only
asks about substantiation of qualified tuition and related expenses,
your client must meet all of the eligibility requirements for claiming
the AOTC. Therefore, your client may not claim the AOTC unless all
of the eligibility requirements for the AOTC are satisfied, even if you
answer “Yes” to the question on line 13.

You must keep those records for 3 years from the latest of the
following dates.
• The due date of the tax return (not including extensions).
• The date the return was filed (if you are a signing tax return
preparer electronically filing the return).
• The date the return was presented to the taxpayer for signature (if
you are a signing tax return preparer not electronically filing the
return).
• The date you submitted to the signing tax return preparer the part
of the return for which you were responsible (if you are a nonsigning
tax return preparer).
These records may be kept on paper or electronically in the
manner described in Rev. Proc. 97-22 (or later update). Rev. Proc.
97-22 is on page 9 of Internal Revenue Bulletin 1997-13, which is
available at IRS.gov/pub/irs-irbs/irb97-13.pdf.

Qualified tuition and related expenses. For more information
determining whether expenses meet the definition of qualified tuition
and related expenses, see Pub. 970.
Tuition Statement (Form 1098-T). See Pub. 970 and the
Instructions for Form 8863 for procedures that need to be followed to
claim the AOTC if the student did not receive Form 1098-T. Form
1098-T reports the amount the student paid to the institution for
qualified tuition and related expenses during the calendar year, as
well as certain refunds, reimbursements, scholarships, and grants
processed and administrated by the school.
A taxpayer may claim the AOTC only for qualified tuition and
related expenses actually paid during the calendar year. Amounts
reported on the Form 1098-T may not accurately reflect amounts
actually paid for qualified expenses. Therefore, you must verify the
amount of qualified tuition and related expenses actually paid by, or
on behalf of, the student to determine the amount of the AOTC for
which your client may claim the AOTC. For more information on
eligibility for the AOTC and on determining the expenses that qualify
for the AOTC, see Pub. 970, Form 8863, and the Instructions for
Form 8863.

Paperwork Reduction Act Notice. We ask for you to obtain the
information on this form to carry out the Internal Revenue laws of the
United States. You are required to obtain this information.
You are not required to obtain the information requested on a
form that is subject to the Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or records relating to a
form or its instructions must be retained as long as their contents
may become material in the administration of any Internal Revenue
law. Generally, tax returns and return information are confidential, as
required by Internal Revenue Code section 6103.

Part V—Due Diligence Questions for
Claiming HOH

The time needed to complete and file this form will vary
depending on individual circumstances. The estimated average time
is:

As a paid tax return preparer, you must exercise due diligence to
determine whether a taxpayer meets all of the eligibility
requirements to qualify for HOH filing status. Although line 14 only
asks about substantiation that the taxpayer was unmarried (or
considered unmarried) and provided more than half of the cost of
keeping up a home for the year for a qualifying person, your client
must meet all of the eligibility requirements for claiming HOH filing
status. Your client may not claim HOH filing status unless all of the
eligibility requirements for HOH filing status are satisfied, even if you
answer “Yes” to the question on line 14. For more information on
HOH filing status, see Pub. 501.

Learning about the law or the form . . . . . . .
Preparing and sending the form . . . . . . . . .

18 min.
1 hr., 49 min.

If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we would be
happy to hear from you. See the instructions for the tax return with
which this form is filed.

Part VI—Credit Eligibility Certification
Failure to meet the due diligence requirements for claiming the EIC,
the CTC/ACTC/ODC, the AOTC, and/or HOH filing status could

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