Areas of Emphasis
Around 60% of all mistakes in EITC are results of 3 main areas:
1. The child might not meet the age, residency, or relationship requirement.
2. The case might be that someone is filing as single or HOH when he/she is actually married.
3. A mistake might arise when reporting income or expenses. Special attention has to be paid when the client is answering these questions.
The people who are eligible for EITC:
1. Have earned income2. Have a valid Social Security Number3. Are filing separately and not as married4. Are not a nonresident alien5. Are not a qualifying child of another person6. Are not filing Form 2555 or Form 2555-EZ7. Have limited investment income
Schedule C Supporting Documents Statement
To comply with IRS EITC due diligence requirements, as a paid preparer I am required to make adequate inquiries to be satisfied that the taxpayer is carrying on a business and that the income and expenses reported on the tax return are substantially correct and complete. In the event of a loss of client records or due to poor recordkeeping, a paid preparer I may need to help you as a client reconstruct the records. The reconstruction will demonstrate that the paid preparer exercised due diligence and it will also teach the client about recordkeeping. The goal of record reconstruction is to use available documentation to develop a sound and reasonable estimate of the taxpayer's business income and expenses to support the Schedule C prepared. Although the taxpayer may not have formal books and records with supporting documentation, they may have partial records that can be used as a basis for reconstruction. Knowledgeable tax preparers can guide their client on how to use these partial records to develop support for the Schedule C. This reconstruction can also provide support for the return in the case of an audit. Numerous court cases exist that support the use of reasonable estimates and reconstruction of income and expenses to determine a taxpayer's correct tax liability. However, if the tax preparer is notsatisfied with the accuracy of the reconstructed records, you have the right to refuse to prepare the return.
By signing the acknowledgment, you affirm that I have communicated my professional responsibility to prepare returns that are accurate. The taxpayer is ultimately responsible for the figures computed through record reconstruction, and you are informed as the taxpayer of possible repercussions of filing a false EITC claim whether with or without my assistance. However, as a tax preparer I must exercise duediligence and apply reasonableness as I may be subject to penalties and additional consequences.
(Please provide ALL supporting documentation)
Advertising Contract Labor Commission and fees Depletion Employee benefit programs Insurance (other than health) Mortgage interest Other interest Legal and professional services Office expense Pension and profit sharing Rent or lease of equipment Rent or lease of property Repairs and maintenance Supplies Taxes and licenses Travel Meals (50%) Enter 100% of the expenses Utilities
Please Note: Actual car or truck expenses must be entered in the depreciation menu for this business. You cannot claim both actual expenses and mileage for the same vehicle.Description of Vehicle Date you placed your vehicle in service for business purposes Date Of the total number of miles you drove your vehicle during the tax year, enter the number of miles you used your vehicle for each of the following.Business miles Other
Tax Preparation Checklist
Please provide the following documentation:
Tax Return Preparation
We will prepare your tax return based on information you provide. In the event your return is audited, you will be responsible for verifying the items reported. It is important that you review the return carefully before signing to make sure the information iscorrect. Unless otherwise stated, the services for preparation of your return do not include auditing, review, or any other verification or assurance.
Signatures. By signing below, you acknowledge that you have read, understand, and accept your obligations and responsibilities.
For a joint return, both taxpayers must sign.