Course Information

Course No:  9510322

Course Name:  Earned Income Tax Credit

Field of Study:    Tax Law Topic

Course Description:  

The Earned Income Credit (EIC) is a refundable tax credit that has a significant impact on United States revenue. In fact, EIC claims in any year generally total more than $68 billion.

EIC claims are also increasing in both number and amount. In the ten year period ending in 2016, the number of EIC claims increased from 24.6 million to 27.4 million, an increase of 11.4%. Not only had the number of claims for EIC increased over the period, the average credit per family also increased by 23.5%, from $1,974 at the beginning of the period to $2,437 in the year the 10-year period ended. The combination of an increased number of EIC claims coupled with an increase in the average credit caused the total amount of EIC claimed to climb by 33.8% over the period from $48.5 billion to $64.9 billion.

In a recent year, 150.3 million individual federal tax returns were filed, and 27.4 million—18.2% of individual taxpayers—claimed the Earned Income Credit. Based on that percentage, it would not be unexpected that approximately one taxpayer in every five may claim the EIC.

Learning objectives: After completing this section, you should be able 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.
  • 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.
  • 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.
  • 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.

Course Material: Online Material

Program level: Overview

Prerequisites: General understanding of federal income taxation.

Advance preparation: None

Type of delivery method: QAS Self-study

Recommended CPE credits:   4.0

Final examination expiration date:   The program participant will have one year from the date of purchase to complete the course and final examination.