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Paid Preparer Due Diligence Extended to Head of Household Eligibility

The new tax law expands a paid preparer’s due diligence and record keeping requirements under IRC section 6695(g) to include determining a client’s eligibility to file as head of household. It imposes a $500 penalty for each failure. Due diligence requirements are already in place on Form 8867 for child tax credit, American opportunity tax credit and earned income tax credit.


Until the Treasury Department and the IRS provide guidance, it is uncertain if the effective date will apply to 2017 returns, 2018 returns or perhaps even earlier year returns if prepared after Dec. 31, 2017. Until then, practitioners should continue to exercise due diligence and presume that the new provision applies now.


Since most companies have published their "organizers," practitioners might consider modifying their firm’s organizer to include the elements that demonstrate the preparer exercised due diligence. For example, to show due diligence in the head of household area, a series of questions might be added to the organizer as to whether the taxpayer was single or legally separated for the last half of the year, that a qualifying dependent lived with the taxpayer for at least half the year (unless the dependent is a parent), and that the taxpayer provided more than half the costs of maintaining a home where the taxpayer and dependent lived. Organizers are completed directly by the taxpayer and such assertions may provide protection from any preparer due diligence penalty. Alternatively, the preparer might have a standard memo to file that memorializes a conversation with the taxpayer that shows that the taxpayer qualifies for the benefit or status.   



Patty Wyatt

Anthony, try this link: for Spanish translation or go to the IRS website for more options.

Patty Wyatt
Texas Society of CPAs


is there a form in spanish explaining the rules for HEAD OF part of my due diligence i would have my client sign the form.

Patty Wyatt, TSCPA

The IRS has a free webinar on "Tax Reform Due Diligence Requirements" scheduled Dec. 13, 2018.

Here is the link:


4 years paid, 2 years VITA. I just got through reading the due diligence form and *I* am not 100% sure what counts as due diligence for Heads Of Household who are potentially EITC and/or child tax credit eligible.

Considering I work and live in a neighborhood where a *lot* of my clients are Heads Of Household and also have family and/or financial situations that don't fit the "white picket fence" stereotype but do meet my "plausible and consistent" standards once I've asked sufficient questions, I'm worried for both my clients and myself that just asking the questions and notating answers isn't going to save myself, my company OR my clients from IRS problems.

Sandra Gitlitz

I have no problem with me completing the due diligence but what about the do it yourselfers. Who is monitoring them?

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