As most of you know, the IRS has been asking tax professionals to ensure that credits and tax benefits are only given to those who qualify. In our case, that means asking our clients (some who have known me since I was a lot shorter than I am now) for additional documentation for our files.
Well, I think it is safe to say that the IRS is no longer asking. Beginning in the 2019 tax filing season (filing 2018 tax returns), the IRS will levy a penalty on the tax professional of $520 per credit that was not properly documented. These penalties could reach as high as $2,000 for one tax return!! I need a minute… this makes me a bit light headed….
If you are thinking that every year we seem to be asking for more information, you are correct. Identity theft and tax return fraud continue to grow and those of us who follow the rules are shouldering the burden of proving our eligibility for credits and tax benefits.
Luckily the IRS has provided us with guidance to ensure that all of our (cough)(cough) are covered. We are currently in the process of trying to figure out the best way to get the information out to our clients before they drop off their information. We do not want anyone to have to make extra trips or gather information a second time.
Please share these links with everyone you know, whether they are a client of ours or not, all tax professionals have the same due diligence requirements. Click on the link for each of the credits or filing status that you think you may be eligible for and find the documents that we need to be able to claim that tax benefit for you.
Head of Household Filing Status
Dependent – Qualifying Child or Qualifying Relative
Earned Income Credit
American Opportunity Education Credit https://www.eitc.irs.gov/eitc/files/downloads/Form_886_H-AOC.pdf
As always, we are in this together! Let us know if you have any questions. I am going to go do some more deep breathing to try to forget about those penalty numbers.