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Earned Income Credit #291626

Course Overview

Credit

Amount

CPA

EA / OTRP

Course Author: Paul J. Winn CLU ChFC Field of Study (CPA): Taxes Field of Study (EA/OTRP): Federal Tax Law

Course Description

Course publication/revision date: This course was updated on 2/20/2026 (covers the 2026 tax year).

The Earned Income Credit (EIC) is a refundable tax credit that has a significant impact on United States revenue and, in the 2022 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.

Table of Contents

Chapter 1 – Earned Income Credit Rules2

Introduction	2
Learning Objectives	2
Eligibility to Receive EIC	2
EIC Rules Applicable to Everyone	2
Adjusted Gross Income Limits	2
Valid Social Security Number Required	3
Tax Filing Status	3
Separated Spouses	3
Citizenship or Residency	4
Foreign Earned Income	4
Investment Income	4
Earned Income	4
EIC Rules That Apply Only if the Taxpayer Has a Qualifying Child	4
Relationship, Age, Residence and Joint Return Tests	5
The Relationship Test	5
The Age Test	5
Student Defined	5
Permanently and Totally Disabled Defined	6
The Residency Test	6
Exception for U.S. Military Stationed Outside the U.S.	6
The Joint Return Test	7
Child Must Have Valid Social Security Number	7
Taxpayers with Qualifying Children who Fail to Meet Identification Requirements	7
Qualifying Child of More than One Person Rule	7
Tiebreaker Rules	7
Qualifying Child of Another Taxpayer Rule	8
EIC Rules That Apply if Taxpayer Does Not Have a Qualifying Child	8
The Age Rule	8
Death of Spouse During Year	9
The Dependent of Another Person Rule	9
The Qualifying Child of Another Taxpayer Rule	9
The Main Home Rule	9
Figuring the Amount of the Earned Income Credit	9
Calculating Earned Income for EIC Purposes	9
Taxpayers Not Self-Employed, Statutory Employees, Clergy or Church Employees	10
Self-Employed Taxpayers, Statutory Employees, Clergy and Church Employees	10
Summary	11
Chapter Review	11

Chapter 2 – Earned Income Credit Errors13

Introduction	13
Learning Objectives	13
Incidence of Earned Income Credit Errors	13
Factors Leading to Earned Income Credit Errors	14
Estimated Revenue Impact of Earned Income Credit Errors	14
Common Earned Income Credit Errors	15
Earned Income Credit Errors Involving Qualifying Children	15
Qualifying Child Requirements	15
When a Child is Disabled	16
Avoiding Qualifying Child Earned Income Credit Errors	16
Earned Income Credit Errors Involving a Client's Filing Status	17
Single Filing Status	17
Head of Household Filing Status	17
Married Persons Living Apart	18
Avoiding Filing Status Earned Income Credit Errors	18
Earned Income Credit Errors Involving Income Reporting	19
Avoiding Income Reporting Earned Income Credit Errors – Red Flags	19
Earned Income Credit Errors Involving Social Security Numbers	20
Avoiding Social Security Number Earned Income Credit Errors	20
Summary	20
Chapter Review	21

Chapter 3 - EIC Disallowance23

Introduction	23
Learning Objectives	23
IRS Efforts to Reduce Improper EIC Payments	23
Claiming EIC after Disallowance	23
IRS Form 8862 Timing	23
Filing IRS Form 8862	24
Exceptions	24
Client Consequences of EIC Disallowance	24
Disallowance Due to Reckless or Intentional Disregard of EIC Rules	24
Disallowance Due to Fraud	25
Summary	25
Chapter Review	25

Chapter 4 - EIC Due Diligence27

Introduction	27
Learning Objectives	27
Tax Preparer Due Diligence a Statutory Requirement – IRC §6695	27
Due Diligence Requirements	28
Paid Preparer's Due Diligence Checklist – IRS Form 8867	28
Due Diligence Questions to Ask to Avoid Qualifying Child Errors	28
Paid Preparer's Due Diligence Checklist Best Practices	28
EIC Computation	29
Computation Best Practices	29
Know the Law and the Client – Ask the Right Questions	29
When Should a Preparer Ask Additional Questions – Examples	30
Knowledge Requirement Best Practices	30
Record Maintenance	30
Record Maintenance Best Practices	31
Failure to Meet Due Diligence Requirements	31
Consequences for the Tax Return Preparer	31
Possible Consequences for the Preparer's Employer	32
Summary	32
Chapter Review	33

Answers to Chapter Review Questions35

Chapter 1	35
Chapter 2	36
Chapter 3	37
Chapter 4	39

Glossary41

Index43

Course Details

Author: Paul J. Winn CLU ChFC

Paul J. Winn CLU ChFC — Financial Writer, Editor & Trainer. Education: B.A., St. John’s University (1961–1964); Law School, University of Virginia (1964–1965); MBA program Binghamton University (1986–1989); CLU (1985); ChFC (1987). Experience: Thirty years in the life insurance and investment industry (1965–1995). Thirty-one years as a financial writer, editor and trainer (1995–2026). Paul held positions at Mutual Life Insurance Company of New York as product developer and compensation officer; at Security Mutual Life Insurance Company as general agent, marketing vice president, and agency vice president; at Principal Financial Group as agency manager; and as president of Maryland Financial Corporation, managing a financial adviser corporation providing tax, investment and financial planning. As a writer and editor, Paul is a published book author whose books include Tax Planning from the Heart, Business Succession Planning, and Dominating Obamacare. He served as writer and editor of a major mutual life insurance company’s agent training university, created more than 200 insurance, securities and tax training courses in online, print and scripted classroom formats, and is the founder and CEO of Winn Publications LLC, a tax and insurance continuing education course licensor.

Publication/Revision Date: 2/3/2026

Course Exam Questions (online): 40 (multiple-choice)

Program Delivery Method: Self-Study (NASBA QAS Self-Study)

Available Formats of Course Text: Downloadable PDF, Printed/Mailed

Course Level, Prerequisites, and Advance Preparation Requirements

License	Course Level	Prerequisites	Advance Preparation Requirements
CPA	Overview	None	None
EA/OTRP	Overview	None	None

* This program is appropriate for professionals at all organizational levels.

Sponsor ID Numbers

National Registry of CPE Sponsors I.D.: 107615

IRS Qualified Sponsor I.D.: FWKKO — Course I.D.: FWKK0-T-00747-26-S

State CPA Board Sponsor ID Numbers (where applicable)

Florida Division of Certified Public Accounting: 0004761

Hawaii Board of Public Accountancy: 14003

New York State Board for Public Accountancy: 002146

Ohio Accountancy Board: CPE .51 PSR

Pennsylvania State Board of Accountancy: PX178025

Texas State Board of Public Accountancy: 009349

Learning Objectives

As a result of studying the course material, you should be able to meet the objectives listed below:

Apply 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; and
Recognize the tax return preparer's EIC due diligence requirements.