User's Manual - Drake Software

Drake Software User’s Manual
Earned Income Credit (EIC)
EIC Information for Dependent
If the taxpayer has EIC with qualifying dependents, the EIC Information section of
screen 2 must be completed for each qualifying dependent. If item 13a is answered
No, items 13b and 13c can be left blank, as shown in the Figure 5-46 example.
EIC Preparer Checklist
Figure 5-46: One example of a completed EIC Information section (screen 2)
If a child is not eligible for EIC, this ineligibility must be specified by selecting the
Not eligible for EIC box above item 10 (Figure 5-46). Questions 10, 11, and 13 can
be left blank if this box is selected.
IRS due diligence rules require that all paid preparers complete an EIC Checklist
(Form 8867) for each prepared return claiming EIC. Form 8867 has four parts:
• Part I: All Taxpayers
• Part II: Taxpayers With a Child
• Part III: Taxpayers Without a Qualifying Child
• Part IV: Due Diligence Requirements
In Drake, Part II of this checklist is addressed on screen 2. Fields for Parts I, III, and
IV are located on the 8867 screen.
Screen codes:
EIC, 8867
NOTE
The 8867 screen allows preparers to electronically track data related to
IRS due diligence requirements for Form 8867. In the event of a due diligence
audit, it provides an electronic record corresponding to the
printed Form 8867.
To complete Form 8867 for a return, go to the 8867 screen, accessible from the General
tab, and mark all required boxes.
EIC Due Diligence Screens
Screen codes:
EIC1, EIC2, EIC3,
EIC4
Because a thorough interview is necessary to ensure that all information is gathered
about income, deductions, credits, etc., a comprehensive interview process should be
part of a tax preparer’s office operating procedures. This same logic extends to EIC
due diligence requirements. Since individual tax scenarios change from year to year,
Tax Year 2012 155