Form 8867, Paid Preparer's Due Diligence Checklist, is the form a paid tax preparer must complete and file with any return claiming the earned income credit (EIC), child tax credit, additional child tax credit or credit for other dependents (CTC/ACTC/ODC), the American opportunity tax credit (AOTC) or head of household (HOH) filing status. As of October 2026, failing the due diligence rules can cost $650 per failure for a return filed in 2026.
If you prepare returns for pay, this is one of the forms the IRS checks most closely. If you're a taxpayer, you'll never fill it in, but it explains why your preparer asks so many questions about your children, school and home. Here's what the November 2025 instructions require.
Who must complete Form 8867
Only paid tax return preparers. If you were paid to prepare a return for anyone claiming the EIC, the CTC/ACTC/ODC, the AOTC or HOH filing status, you must complete it and meet the other due diligence requirements. It's filed with the taxpayer's return or amended return, and a signing preparer who e-files the return files Form 8867 electronically with it.
Because it's completed by whichever paid preparer is responsible for a credit, one return can carry more than one Form 8867. Taxpayers preparing their own returns don't file it.
The 4 due diligence requirements
- Knowledge: interview the taxpayer, ask adequate questions, record the questions and answers at the time, and review enough information to decide eligibility and work out each credit.
- Complete Form 8867 truthfully and accurately, and carry out the actions the form describes for each credit and HOH status claimed.
- Submit Form 8867 in the manner required, with the return.
- Keep the required records for 3 years.
The knowledge requirement carries a sharp edge: you must not use information you know, or have reason to know, is incorrect. If a client's answers look inconsistent or incomplete, the instructions expect you to ask more questions and document them.
The records you must keep
| Record | What it covers |
|---|---|
| A copy of Form 8867 | The completed checklist |
| The credit worksheets | The IRS worksheets for the EIC, CTC/ACTC/ODC or AOTC, or your own with the same information |
| Taxpayer documents you relied on | Copies of anything the client provided to show eligibility or figure the credit |
| Source record | How, when and from whom you got the information for Form 8867 and the worksheets |
| Additional information | Any extra questions asked and the client's answers |
Keep them for 3 years from the latest of: the return's due date (not counting extensions), the date the return was filed if you're the signing preparer e-filing it, the date it was presented for signature if you're the signing preparer not e-filing, or the date you sent your part to the signing preparer if you're a nonsigning preparer. Paper or electronic records are both acceptable.
The due diligence penalty
The penalty applies for each failure, and it's adjusted for inflation every year. The IRS's own example: if you prepare a return claiming all four benefits and fail due diligence for all of them, you could face a penalty of $2,600, which is $650 for each of the four credits claimed on a return filed in 2026. Those figures are as of October 2026.
That's per return. A preparer with a pattern of weak interviews across a season can see the total grow quickly, which is why the documentation, not the conversation, is what protects you.
What's new for recent returns
- Beginning in tax year 2025, a taxpayer claiming the CTC or ACTC must also have a valid SSN, as well as the child.
- The instructions set out separate EIC rules for taxpayers with a qualifying child and without one.
- A client claiming the EIC with a qualifying child follows the qualifying child rules even if none of the children has a valid SSN issued on or before the due date.
If you also file returns through the Practitioner PIN method, our Form 8879 guide covers the signature authorization that goes alongside.
Signing and nonsigning preparers
The rules apply to both. If you're the only paid preparer on a return, you're the signing preparer. If another paid preparer handles part of a credit for you, they may be a nonsigning preparer and complete their own Form 8867 for the part they're responsible for, which is why one return can carry several.
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How to work through Form 8867
- Part I: answer the due diligence questions that apply to every credit claimed, including whether you completed the worksheets and asked the right questions.
- Part II: questions for returns claiming the EIC.
- Part III: questions for returns claiming the CTC/ACTC/ODC.
- Part IV: questions for returns claiming the AOTC.
- Tick the boxes for every benefit you determined the taxpayer is eligible for.
- File it with the return and keep your records file for 3 years.
If a client asks why you need so much detail, the honest answer is that the law requires it of you, and it's the same for every paid preparer. Representing a client later on is a separate authorization, covered in our Form 2848 guide.
The verdict
Treat Form 8867 as a record of your interview, not a box-ticking exercise. Ask, write down the answer, keep the document you relied on, and you've met the standard. Skip the notes and every credit on the return becomes a separate $650 risk.
Frequently asked questions
Who files Form 8867?
A paid tax return preparer, for any return or amended return claiming the EIC, the CTC/ACTC/ODC, the AOTC or head of household filing status.
Do taxpayers fill in Form 8867?
No. Only paid tax return preparers complete it.
What is the penalty for not meeting Form 8867 due diligence?
$650 for each failure on a return filed in 2026, so $2,600 if all four benefits fail on one return. The amount is adjusted for inflation each year.
How long must preparers keep Form 8867 records?
3 years from the latest of the return due date, the filing date, the date it was presented for signature, or the date a nonsigning preparer submitted their part.
Is Form 8867 filed with the return?
Yes. It must be filed with the taxpayer's return or amended return, electronically if the signing preparer e-files.
What is the knowledge requirement?
Interviewing the taxpayer, asking adequate questions, documenting the questions and answers at the time and reviewing enough information to decide eligibility and the credit amount.
