Certain Tax Credits Require More Information

This year you may need to provide additional information when claiming the following tax credits to prevent “improper payments”.

* Child Tax Credit (CTC)

* Additional Child Tax Credit (ACTC)

* American Opportunity Tax Credit (AOTC)

For the CTC and ACTC credits, you may be asked how long your children lived with you over the past year, or whether they lived with an ex-spouse, relatives or other guardian.

If you are eligible for the AOTC, which is a credit to defray as much as $2,500 in higher education costs for you or your children, you will need to provide Form 1098-T from the college or university. You will also need receipts for related expenses.

You may also be asked to double-check your forms for incorrect Social Security numbers and dates of birth for the dependents on your return, as these are two common sources of error.

These common errors have helped to make the EIC and the other credits a major source of what the IRS calls "improper payments." The IRS estimates that of the $66 billion in EIC funds paid in 2015, nearly a quarter were collected by filers who didn't qualify to receive them. This is why the IRS is requiring tax preparers to ask more questions.

Starting this year, tax preparers who don't document their compliance with these new requirements could face fines of up to $510 per return.

At Summit CPA we offer multiple resources to assist you with all of your tax and financial needs. Contact our office at 866-497-9761 to schedule an appointment with our advisors.