Level 12

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Due diligence documentation CTC

Forum|Forum|4 years ago
February 7, 2022
21 replies
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On form 8867 Paid Preparers due diligence checklist, on line 5, you may want to list IRS letter 6419 as one of the documents provided by the taxpayer that you relied on to satisfy the record retention requirement for CTC/ACTC computation. Just my opinion.

ProSeries Professional

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Best answer by IRonMaN

Can I still put that even if my client came in and said his dog ate the letter? 🐕

IRonMaNAnswer

Level 15

Can I still put that even if my client came in and said his dog ate the letter? 🐕

Slava Ukraini!

PATAXAuthor

Level 12

@IRonMaN Heidi is usually disciplined and regimental, but if one of my clients tries to pull that lying bull$@&# with me, then Heidi is going to pull a Cujo Part 2 on their cheap @$$....😉🐕☝

Camp1040

Level 10

I always list "tax return" as a document since the dependents name and address are on the form. Circular reasoning but seems to be working.

rbynaker

Level 13

Probably not a bad idea, thanks for the suggestion.

I had plans to revamp my DueDoo forms for TY2021 but then this ACTC mess started and I lost the energy to pursue it. Part of calculating the credit amount involves determining how much advance was received.

Also, IMO the "Line 5 Worksheet" should be included in the file as part of DueDoo. Sounds like ProSeries doesn't produce such a thing? Or at least several folks here have complained that they can't find it. I haven't looked in Drake yet but they're pretty good about including worksheets like that. Edit: Drake does have this worksheet.

Rick

T

TaxGuyBill

@rbynaker wrote:

Also, IMO the "Line 5 Worksheet" should be included in the file as part of DueDoo. Sounds like ProSeries doesn't produce such a thing? Or at least several folks here have complained that they can't find it.

It is not in Basic, but I THOUGHT there was a way to get it in Professional. However, I can't remember how to do it and can't find it now.

rbynaker

Level 13

I'm still trying to wrap my brain around this. In prior years there was a 2-page worksheet buried in the 1040 general instructions for calculating the limitation on the child tax credit (see pages 38-39 of the i1040gi--2020.pdf as an example). Did PS Basic produce that worksheet? I'm pretty sure Pro did and at one point I made a determination that it was required for due diligence so I always included it in my DueDoo "bundle" along with copies of any documents I relied upon and client Q&A.

For 2021, the IRS moved everything to the "new and improved" 3-page Schedule 8812. The worksheet is no longer in the i1040gi.pdf but is instead in the i1040s8.pdf. The limitation (or at least one of them) is now calculated on S8812 Line 5. There are four other worksheets in those instructions which may or may not be relevant depending on circumstances. I think the Line 5 is always relevant, if nothing else it's $3,000 (or $3,600) x # of children which IMO is certainly part of "determining the amount" of the credit.

Does PS Basic (or Pro) still produce a version of the "old" worksheet? Or is the math truly just buried in the software without showing any work whatsoever? I think that's a potential DueDoo disaster. I can picture the IRS auditor now:

Auditor: "And how did you determine this number you put on Line 5?"
Tax preparer: Blank stare. "I don't know. The software does that calculation."
Auditor: "That will be $545 please."

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