You have been preparing tax return for this old client for more than 5 years. Their income is below the EITC limit this year. Because of the due diligence process, you ask for copy of their son's birth certificate. But they do not want to provide because of "privacy issue". They have been claiming the son as their dependent ever since you started preparing their tax return 5 years ago though. What would you do?
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Not sure, but I personally have never asked a client for a birth certificate. I ask a lot of personal questions, sometimes to the consternation of my clients but never asked for that. -
I would get them the credit, you can note about them being a dependant for the last 5 years in your 8867, I would simply be sure to ask all the questions.Comment
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Your due diligence does not require that you get a birth certificate. If you doubt that they are telling the truth, then that may be required. However, I just ask my clients about their dependent, where the parents are, what their relationship is, what supporting documentation they have, etc. and take their word for it. If I have reason to doubt them, I will have them provide one of those documents as verification for my due dilligence.
Right from the EITC website:
Must I review the birth certificate to verify the age of a qualifying child? No, it's not required. However, if you have reason to question a child's age or relationship, you may want to request the birth certificate. If you use the information to determine EITC eligibility, you need to keep a copy with your records.MichaelComment
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A related question.
Does the due diligence process require the tax prepare to keep a copy of the clients and their children social security cards?
What about if they agree to only show the cards to you so you can confirm that they do not have the "Not valid for employment" statement on it. But they refuse to let you make a copy?Comment
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Why a birth certificate? The IRS has been accepting this dependent for all these years. I have my clients review and initial each page of the 8897, sign and date the first page and put that in my client file. If there are any questions by taxing authority, I have the documentation that the client provided the information. If the IRS has an issue with the credit they have the power to deny the credit.Originally posted by AccTaxMan View PostBelieve nothing you have not personally researched and verified.Comment
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Once again from the EITC website:Originally posted by Questionguy101 View Post
Must I review Social Security cards or keep a copy? No. There is no requirement to review Social Security cards, but it is a best practice to review them. You are more likely to get the child's name and number correct if copied directly from the card. Also, having copies of cards is helpful in resolving e-file rejects. If the client provides a Social Security card and you use it to determine eligibility for or amount of EITC, you need to keep a copy.MichaelComment
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I thought our policy for Big Firm was not to keep any such documents on file for various security reasons.
In any case, I have reviewed SS cards just to make sure I have the proper number but do not make copies of and keep in the clients file.Comment
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