Earned income tax credit (EITC)
The earned income tax credit is a refundable credit for low and moderate income workers. Its size depends on earned income, filing status and the number of qualifying children.
Investment income above a yearly limit removes the credit, and paid preparers must meet due diligence rules on Form 8867 or face a penalty for each failure. A valid Social Security number is required for the taxpayer and each qualifying child.
Example. A preparer who claims the EITC for a client without asking the questions Form 8867 requires can be penalized for each failure, even if the claim turns out correct.
By Binod Raj Singh, CPA (licensed in Montana) · Updated for the 2026-2027 exam windows · Last updated 2026-11-05