The Earned Income Credit (EIC) is a refundable tax credit that has a significant impact on United States revenue and, in the 2019 tax year, amounted to almost $63 billion claimed by more than 25 million tax filers.

In a recent year, 153.8 million individual federal tax returns were filed, and 19.6 million—12.7% of individual taxpayers—claimed the Earned Income Credit. Based on that percentage, it would not be unexpected that any tax return preparer will prepare the tax returns for many EIC claimants.

Learning Objectives:

• Recall the earned income credit rules to determine if a taxpayer is eligible for the tax credit


• Identify the common errors committed in connection with the earned income credit


• Describe the consequences of the IRS’ disallowance of the earned income credit


• Recognize the tax return preparer’s EIC due diligence requirements