P3-U06 · PART 3 · SOURCE CYCLE 2026-2027
Due Diligence for Refundable Credits and HoH
How to complete this unit
This unit uses 15 source-gated recall cards and 18 admissible practice questions. Complete the sequence in order; the unreleased wiki prose remains outside the learner path.
- 1 · LearnBuild the rule
Answer each recall prompt before opening it. Then learn the exact rule, test the controlling facts through four quick challenges, explore common questions, and finish with one own-words teach-back.
- 2 · ApplyUse it in context
Complete at least 18 mapped questions over two sessions. Review the explanation even when the answer is correct.
- 3 · ProveTest readiness
Use the Part 3 mock under time pressure. Return here for every flagged or missed concept before the next attempt.
Verified recall questions
Only cards whose complete question and answer were checked against exact primary-authority evidence appear here. Stable unit ownership gathers this lesson across 1 textbook collection.
Q1.What must a preparer do when information for a covered credit or head-of-household claim appears incorrect, inconsistent, or incomplete?
make reasonable additional inquiries document the questions and client responses may not ignore implications of known information may not file the claim without enough information to determine eligibility and amount
Q2.A paid preparer receives information for an EITC claim that appears incomplete. What must the preparer do?
Make reasonable inquiries Contemporaneously document the inquiries
Q3.When does the Form 8867 knowledge standard require additional inquiries?
When supplied information appears incorrect, inconsistent, or incomplete.
Q4.Must Form 8867 be filed with a return claiming EIC or head of household?
Yes. Form 8867 must be filed with the taxpayer’s return or amended return claiming EIC, CTC/ACTC/ODC, AOTC, and/or HOH filing status.
Q5.How does a paid preparer meet the Form 8867 knowledge requirement for EIC or HOH?
By interviewing the taxpayer, asking adequate questions, contemporaneously documenting responses, and reviewing adequate information to determine eligibility and credit amounts.
Q6.Which of the following is NOT a credit for which the IRS specifies additional due diligence requirements for preparers?
Energy Efficient Home Improvement Credit
Q7.What is the "performance standard" set by IRS regulations for all EITC, CTC, ACTC, ODC, AOTC, and HOH returns?
What a reasonable and well-informed tax preparer, knowledgeable in the law, would do.
Q8.All of the following are potential penalties for a preparer who files fraudulent refund claims except:
Criminal prosecution by the OPR.
Q9.All of the following are due diligence requirements except:
To verify the taxpayer's information with the appropriate third parties.
Q10.Austin is an EA who submits a return for his client on March 1, 2026, for the 2025 tax year. The return claims the Earned Income Tax Credit, but Austin fails to submit Form 8867 for the return, because he did not purchase professional software, and the Form 8867 is not available in the consumer software he is using. What penalty does Austin potentially face?
$650
Q11.The IRS can impose the following ban related to the AOTC, EITC, CTC/ACTC, ODC and/or HOH filing status:
Ten-year ban for fraud.
Q12.All of the following are common errors taxpayers make in claiming the EITC except:
Listing earned income for the year.
Q13.Roger is a tax preparer, and he has a new client named Samantha. Samantha tells Roger: • She has no Form 1099-NEC. • She was self-employed cleaning houses. • She earned $13,000. • She had no expenses related to the cleaning business. • She has three children who live with her; all three are under the age of 10. Samantha says she would like to claim the Earned Income Tax Credit and the Child Tax Credit. What is the best course of action for Roger in this case?
Ask questions to determine the facts and ask for proof of income or any expenses.
Q14.When must a tax preparer complete Form 8867 (Paid Preparer's Due Diligence checklist) for a client claiming the AOTC?
Every year.
Q15.Andreas and Briseis are citizens of Ecuador. They are married and live in the United States. Both have valid ITINs. They have two children, both of whom have valid SSNs, because both children were born in the United States. Can Andreas and Briseis claim the EITC on their tax return, if they meet the income requirements?
They cannot claim the EITC, regardless of whether their children have valid SSNs.
Ready to move on?
- ▸ Explain at least 80% of these 15 rules without opening the answer, twice on different days.
- ▸ Score 80% across 18 or more mapped questions over two sessions, not one memorized round.
- ▸ Complete a timed Part 3 mock and return to this unit if its concepts remain flagged or missed.
Use these checks to choose your next study action. They do not predict a PSI scaled score.