Filing Status Facts
A taxpayer is legally separated on Dec 31. What is their filing status?
Single (considered unmarried – Pub 4012 B-13)
Which form ensures preparer compliance for EITC, CTC, AOTC, and HOH?
Form 8867
The EITC is refundable. True or False?
True
What regulation governs preparer conduct before the IRS?
Circular 230
What form is used to report business income?
Schedule C (Form 1040)
Who is a “qualifying person” for Head of Household?
A dependent child or relative who lived with the taxpayer more than half the year – Pub 4012 B-15
What must be documented to avoid a $600 due diligence penalty?
Eligibility questions, interview notes, and supporting docs
The Child Tax Credit is always refundable. True or False?
False – partially refundable (ACTC)
Is a preparer allowed to share client tax info without consent?
No – violates §10.51 and Pub 5708 WISP requirements
Name one common deductible business expense.
Advertising, supplies, vehicle expenses, etc.
Can a widow with a dependent child file as Qualifying Surviving Spouse?
Yes, for up to 2 years following the spouse’s death – Pub 4012
What are the four credits that require due diligence?
EITC, CTC/ODC, AOTC, and HOH filing status
Who qualifies for AOTC?
A student in first 4 years of post-secondary education
What form documents consent to disclose tax return info?
Consent to Disclosure (S_DSC_1)
What accounting method do most sole proprietors use?
Cash basis
What form do you use to verify Head of Household due diligence?
Form 8867 – Paid Preparer’s Due Diligence Checklist
What IRS publication provides preparer due diligence guidance?
Pub 4491 – VITA/TCE Training Guide
Can taxpayers claim both EITC and CTC?
Yes, if they meet both sets of qualifications
What is the penalty for knowingly preparing a false return?
Suspension, censure, or disbarment under Circular 230 §10.50
Are 1099-NEC payments reported on Schedule C?
Yes, as business income
What determines whether someone is “considered unmarried”?
They lived apart from spouse last 6 months and paid over half the cost of home – “Considered Unmarried” sheet
What happens if you fail due diligence repeatedly?
Penalties, suspension, or disbarment under Circular 230
What form documents the AOTC?
Form 8863
What must every tax office have to protect client PII?
Written Information Security Plan (WISP) – Pub 5708
What happens if a taxpayer doesn’t issue a 1099 to contractors?
Possible IRS penalties and loss of deductions