This page intentionally left blank. - Drake Software Support

Drake Software User’s ManualEarned Income Credit (EIC)EIC Preparer ChecklistIRS due diligence rules require that the preparer complete an EIC Checklist (Form8867) for each prepared return claiming EIC. This checklist has four parts: Part I: AllTaxpayers; Part II: Taxpayers With a Child; Part III: Taxpayers Without a QualifyingChild; and Part IV: Due Diligence Requirements. In Drake, Part II of this checklist isaddressed in the EIC Information section of screen 2. Fields for Parts I, III, and IVare located on the 8867 screen.Screen codes:EIC, 8867_NOTEThe 8867 screen allows preparers to electronically track datarelated to IRS due diligence requirements for Form 8867, Paid Preparer’sEIC Checklist. In the event of a due diligence audit, it providesan electronic record corresponding to the printed Form 8867.To complete the EIC Checklist for a return, go to the EIC screen, accessible from theGeneral tab, and mark all required boxes.EIC Due Diligence ScreensNEW FOR2008Supplemental EIC Due Diligence screens can help ensure that all dataon the taxpayer’s qualifying children, reported income, and filing statuseligibility are thoroughly researched, accurate, and complete.Because a thorough interview is necessary to ensure that all information is gatheredabout income, deductions, credits, etc., a comprehensive interview process should bepart of a tax preparer’s office operating procedures. This same logic extends to EICdue diligence requirements. Since individual tax scenarios change from year to year,all clients—including returning clients—should be interviewed in order to obtain aclear picture for the current-year tax return.New in 2008, Drake is providing EIC Due Diligence screens. You can use thesescreens as a tool for retaining the inquiries made of taxpayers to ensure that they meetEIC eligibility requirements. Described in Table 5-14, these screens contain interviewquestions and fields that must be completed (if required by selections made in Setup)regarding EIC.Table 5-14: EIC Due Diligence Screens (New in 2008)ScreenCodeScreen NameDescriptionEIC1 EIC Due Diligence - Qualifying Child Screen contains questions pertaining to the age, relationship,and residency tests for a qualifying child.EIC2 EIC Due Diligence - Income Screen contains questions concerning the taxpayer’sreported earned income.EIC3 EIC Due Diligence - Head of Household Screen contains questions pertaining to the tests formarriage, qualifying person, and cost of keeping up ahome tests for Head of Household filing status.Tax Year 2008 131