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Desktop: Additional Due Diligence Documentation

TaxSlayer Pro includes a worksheet you can use to document your due diligence with respect to a taxpayer claiming the earned income credit (EIC). This worksheet is available to be completed if the taxpayer qualifies for the EIC, and it includes check boxes and fields to fill in for each qualifying child in the return.

To access the Additional Due Diligence Documentation worksheet, from the Main Menu of the tax return (Form 1040) select:

  • Payments, Estimates & EIC
  • Earned Income Credit (Schedule EIC)
  • Complete Schedule EIC
  • Additional EIC Due Diligence Documentation

The Additional Due Diligence Documentation worksheet includes the following questions:

Relationship Tests for EIC

  1. What documents does the taxpayer have available for these children?
  2. If the relationship between the taxpayer and the child Is not son/daughter, where were the biological parents living in current tax year?

Residency Test for EIC

  1. What documents does the taxpayer provide showing that the child was a full-time student for at least 5 months?
  2. If only one parent is claiming the child, why is the other parent not claiming the child?

Permanently and Totally Disabled

  1. What documents can the taxpayer provide showing that the qualifying child is permanently and totally disabled?
  2. What is the disability?
  3. When did the disability begin?
  4. Can this child substantially engage in any work related to employment?
  5. Explain the reason why the taxpayer is claiming this child and why the parents are not claiming their child,
  6. Explain why the taxpayer and son/daughter or brother/sister have different last names?
  7. Explain details of age difference between taxpayer and each qualifying child (for age differences of less than 15 years between taxpayer and child).
  8. Taxpayer is under 19. Explain how the taxpayer is not a qualifying child of another.
  9. Explain why the child was claimed for EIC this year and not in the prior year.

Returns with a business

  1. Business Substantiation Questions
  2. Business Expense Questions

Forcing the worksheet to be encountered

You can configure TaxSlayer Pro so that a preparer encounters the Additional Due Diligence Documentation worksheet when it hasn't been completed in a return that qualifies for EIC. From the Quick Menu select:

  • Configuration
  • Advanced Configuration
  • EIC Due Diligence Configuration
  • Show Additional Due Diligence Documentation Exiting Return? - Answer YES.

Additional Information:

IRS: Preparer Due Diligence