What Is Form 8867 and Why the IRS Takes It Seriously

If you've ever worked with a tax professional and claimed certain credits: like the Earned Income Credit or Child Tax Credit: there's a form your preparer filled out that you probably never saw. It's called Form 8867, and while it lives behind the scenes, the IRS pays very close attention to it.

Let's break down what this form is, why it exists, and what it means for you as a taxpayer.

What Is Form 8867?

Form 8867 is officially called the Paid Preparer's Due Diligence Checklist. In plain English, it's a form that tax professionals are required to complete whenever they prepare a return that claims certain tax benefits.

Think of it as a verification checklist. Before your tax preparer can claim specific credits or filing statuses on your behalf, they need to confirm: in writing: that they've done their homework. They're not just taking your word for it. They're documenting that they asked the right questions, reviewed the right information, and made sure you actually qualify.

The IRS created this form specifically to reduce fraudulent tax claims. Unfortunately, some credits (especially refundable ones that put money directly in your pocket) have been targets for fraud over the years. Form 8867 is the IRS's way of holding tax preparers accountable.

Who Does Form 8867 Apply To?

Here's where it gets important: Form 8867 applies to paid tax preparers, not to you directly.

If you're filing your own taxes using software or doing them by hand, you won't fill out this form. But if you hire someone to prepare your return: whether that's a CPA, an enrolled agent, or a tax preparation service: and your return includes any of the following, they must complete Form 8867:

• Earned Income Credit (EIC) – A refundable credit for lower-income workers
• Child Tax Credit (CTC) – Credit for qualifying children under 17
• Additional Child Tax Credit (ACTC) – The refundable portion of the Child Tax Credit
• Credit for Other Dependents (ODC) – Credit for dependents who don't qualify for the CTC
• American Opportunity Tax Credit (AOTC) – Education credit for college expenses
• Head of Household (HOH) filing status – A filing status with better tax rates for unmarried people supporting dependents

If any of these show up on your return and you used a paid preparer, Form 8867 should be attached to your filed return.

A Simple Example

Let's say Maria is a single mom with two kids. She works as a gig driver and earns about $32,000 a year. She goes to a local tax office to have her return prepared.

Maria qualifies for the Earned Income Credit because of her income level and her children. She also qualifies for the Child Tax Credit. And because she's unmarried and pays more than half the costs of keeping up her home for her kids, she can file as Head of Household.

Before the tax preparer can claim all of these benefits, they need to complete Form 8867. This means they'll ask Maria questions like:

• Did your children live with you for more than half the year?
• Are you the only person claiming these children?
• Did you pay more than half the cost of maintaining your home?
• What documentation do you have to support this?

The preparer will document Maria's answers, review any supporting documents (like school records or utility bills), and then check the appropriate boxes on Form 8867 to confirm they've verified her eligibility.

This form gets filed along with Maria's return. If the IRS ever has questions, they can look at Form 8867 to see that the preparer followed the rules.

Common Mistakes (and Why They Matter)

Even though Form 8867 is the preparer's responsibility, mistakes on this form can affect you. Here are some common issues:

1. Not Asking Enough Questions

Some preparers rush through the process or assume they already know the answers. But the IRS requires preparers to actually interview clients and document what was discussed. If a preparer skips this step, they're not meeting their due diligence requirements: and your return could be flagged later.

2. Claiming Credits Without Verification

It's tempting to claim every credit possible to maximize a refund. But if a preparer claims the Earned Income Credit without verifying that your children actually lived with you, or claims Head of Household status without confirming you're unmarried and supporting dependents, that's a problem. The IRS can (and does) audit these claims.

3. Poor Record-Keeping

Preparers are required to keep copies of Form 8867, their worksheets, and any documentation they used to verify eligibility: for three years. If they can't produce this paperwork during an IRS review, they face penalties.

4. Not Understanding the Rules

Tax law changes. What qualified you for a credit last year might not qualify you this year. A good preparer stays current on the rules. A not-so-good preparer might rely on outdated information, which puts your return at risk.

Why Form 8867 Matters at Tax Time

You might be wondering: "If this is the preparer's form, why should I care?"

Great question. Here's why it matters to you:

It Protects You

When your preparer completes Form 8867 properly, it means they've taken the time to verify that you actually qualify for the credits and filing status on your return. This reduces your risk of an audit or having your refund delayed because something doesn't add up.

It Signals a Quality Preparer

If your tax preparer is asking you detailed questions about your living situation, your children, your income sources, and your expenses: that's a good sign. It means they're doing their due diligence. If they're not asking questions and just plugging numbers into software, that's a red flag.

It Can Affect Your Refund Timeline

The IRS takes extra time to review returns claiming the Earned Income Credit and Additional Child Tax Credit. By law, the IRS can't issue refunds for these credits until mid-February, and they scrutinize these returns more closely. If Form 8867 is incomplete or the preparer didn't do their job, your refund could be delayed even longer: or denied.

Penalties Are Real

While the penalties for Form 8867 violations fall on the preparer (around $600 per failure for 2025), the consequences of a fraudulent or incorrect return fall on you too. If the IRS determines you claimed a credit you didn't qualify for, you could owe back taxes, interest, and penalties. In some cases, you might even be banned from claiming certain credits for years.

What This Means for Choosing a Tax Preparer

When you're looking for someone to prepare your taxes, especially if you're claiming credits like the EITC or CTC, pay attention to how they work. A reputable preparer will:

• Ask you detailed questions about your situation
• Request documentation to support your claims
• Explain why they're claiming certain credits
• Take the time to get it right

If someone promises you a huge refund without asking any questions, that's a warning sign. They might be cutting corners on their due diligence: and that can come back to bite you.

The Bottom Line

Form 8867 exists to make sure tax preparers are doing their jobs correctly. It's a layer of protection for the tax system, but it also benefits you. When your preparer follows the rules, you're less likely to face audits, delays, or surprise tax bills down the road.

The credits covered by Form 8867: Earned Income Credit, Child Tax Credit, education credits, and Head of Household status: are valuable benefits that can put real money in your pocket. But they come with rules. Working with a preparer who takes due diligence seriously means you get the credits you deserve, without the headaches.

If you're unsure how this applies to you, schedule a consultation. We're happy to walk you through your situation and make sure everything is handled the right way.