IRS Instruction 8867 – IRS Forms, Instructions, Pubs 2026 – In the world of tax preparation, compliance is key, especially when dealing with valuable tax credits and specific filing statuses. IRS Form 8867, known as the Paid Preparer’s Due Diligence Checklist, plays a crucial role in ensuring that paid tax preparers meet their obligations under the law. This guide breaks down IRS Instruction 8867, the official instructions for completing Form 8867, helping tax professionals avoid penalties and accurately determine taxpayer eligibility for credits like the Earned Income Credit (EIC), Child Tax Credit (CTC), and more. Whether you’re a seasoned tax preparer or new to the field, understanding these instructions is essential for the 2025 tax year filings in 2026.
What is IRS Form 8867?
IRS Form 8867 is a mandatory checklist that paid tax return preparers must complete and submit with any federal income tax return or claim for refund that includes certain tax credits or the Head of Household (HOH) filing status. Its primary purpose is to document that the preparer has exercised due diligence in verifying the taxpayer’s eligibility for these benefits and calculating the correct amounts. Failure to properly complete and file this form can lead to significant penalties from the IRS.
The form is divided into several parts, each focusing on different aspects of due diligence, from general requirements to specific inquiries for each credit or status claimed. For a visual overview, here’s a sample of what Form 8867 looks like:
You can download the latest version of IRS Instruction 8867 directly from the official IRS website: https://www.irs.gov/pub/irs-pdf/i8867.pdf.
Who Must File Form 8867?
Paid preparers are required to file Form 8867 if they prepare a return or claim for refund that claims the EIC, CTC (including Additional Child Tax Credit – ACTC), Credit for Other Dependents (ODC), American Opportunity Tax Credit (AOTC), or HOH filing status. This applies to both original returns and amended returns. If multiple credits are claimed, the preparer must address all applicable sections on a single form or, in some cases, multiple forms for e-filed returns (up to four).
Non-signing preparers (those who assist but don’t sign the return) may also need to complete parts of the form if they’re involved in determining eligibility. However, the signing preparer is ultimately responsible for submission.
Credits and Filing Status Covered by Form 8867
Form 8867 ensures due diligence for the following benefits:
| Benefit | Description |
|---|---|
| Earned Income Credit (EIC) | A refundable credit for low- to moderate-income workers, with or without qualifying children. |
| Child Tax Credit (CTC)/Additional Child Tax Credit (ACTC)/Credit for Other Dependents (ODC) | Credits for qualifying children and other dependents; CTC/ACTC is partially refundable. |
| American Opportunity Tax Credit (AOTC) | A credit for qualified education expenses in the first four years of higher education. |
| Head of Household (HOH) Filing Status | A filing status for unmarried individuals who maintain a home for a qualifying person. |
Preparers must check the appropriate boxes in Part I of the form for each benefit claimed.
Key Due Diligence Requirements
IRS Instruction 8867 outlines four core due diligence requirements that preparers must satisfy: knowledge, inquiry, documentation, and computation. These are based on Treasury Regulations and help prevent errors or fraudulent claims.
Knowledge Requirement
Preparers must have a thorough understanding of the tax laws for each credit and HOH status. This includes asking relevant questions to gather facts and ensuring the return is based only on information from the applicable tax year. Even if some eligibility criteria are met, the preparer must confirm all requirements are satisfied.
Inquiry Requirement
If any information provided by the taxpayer appears incorrect, inconsistent, or incomplete, the preparer must make reasonable inquiries. Examples include:
- Verifying child ages, residency, and relationships for EIC or CTC.
- Checking qualified education expenses for AOTC, beyond just Form 1098-T.
- Confirming marital status and home maintenance for HOH.
All inquiries and responses must be documented contemporaneously.
Documentation and Record Retention
Preparers must retain records for three years from the latest relevant date (e.g., filing date or due date). Required records include:
- A copy of Form 8867.
- Applicable worksheets (e.g., from Form 1040 instructions or Schedule 8812).
- Copies of documents relied upon (e.g., school records, bank statements).
- Notes on how and when information was obtained.
Records can be kept electronically or on paper, per IRS guidelines.
Computation Check
Complete the IRS-provided worksheets or equivalents for each credit claimed. This ensures accurate calculations and includes verifying income sources, especially for self-employed taxpayers on Schedule C.
How to Complete Form 8867?
IRS Instruction 8867 provides step-by-step guidance for filling out the form. Key parts include:
- Part I: Due Diligence Requirements – Answer yes/no questions on completion based on tax year info, worksheets, knowledge, and inquiries.
- Part II: Due Diligence Questions for Returns Claiming EIC – Specific questions on qualifying children, self-employment, and prior disallowances.
- Part III: Due Diligence Questions for Returns Claiming CTC/ACTC/ODC – Inquiries about child identification numbers and custodial arrangements.
- Part IV: Due Diligence Questions for Returns Claiming AOTC – Verify paid expenses and student eligibility.
- Part V: Due Diligence Questions for Returns Claiming HOH – Confirm qualifying person and home maintenance.
If a prior-year credit was disallowed (not due to math errors), attach Form 8862 unless an exception applies.
Penalties for Non-Compliance
Failing to meet due diligence requirements can result in a penalty of $650 per failure for returns filed in 2026 (adjusted for inflation). For example, if all four credits are claimed without proper diligence, the penalty could reach $2,600 per return. Penalties apply under IRC Section 6695(g) and can be assessed against the preparer or their firm.
Recent Updates for Tax Year 2025
For tax year 2025 (returns filed in 2026), key changes include:
- Taxpayers claiming CTC or ACTC must have a valid Social Security Number (SSN); spouses on joint returns may have an ITIN.
- Children with ITINs or Adoption Taxpayer Identification Numbers (ATINs) can no longer qualify for CTC/ACTC but may qualify for ODC.
- Clarifications on EIC tiebreaker rules and AOTC expense verification.
These updates are reflected in the revised November 2025 instructions.
Conclusion
Mastering IRS Instruction 8867 is vital for tax preparers to ensure compliance, protect clients, and avoid penalties. By following the due diligence checklist, you can confidently handle claims for EIC, CTC/ACTC/ODC, AOTC, and HOH status. For the most current details, always refer to official IRS resources. Download the full IRS Instruction 8867 PDF here: https://www.irs.gov/pub/irs-pdf/i8867.pdf. If you’re preparing taxes, consult additional IRS publications like Pub. 501 or Pub. 970 for deeper insights.