Form 8867: What This Tax Preparer Form Means for Expats
- What Form 8867 Is and Why It Matters
- Why Form 8867 Protects You as an Expat
- What Your Tax Preparer Must Do
- Key Questions Your Preparer Should Ask
- Red Flags: When Preparers Aren't Following Due Diligence
- How Form 8867 Benefits Expat Families
- Why Professional Preparation Matters for Expats
- What to Expect from Qualified Preparers
- Common Expat Credit Scenarios
- Choosing the Right Tax Preparer
- Your Role in the Process
- Getting Professional Expat Tax Help
The IRS assessed over $73.6 billion in civil penalties in fiscal year 2022 for failing to meet due diligence requirements when claiming certain tax credits. If you’re an American expat working with a tax professional to claim credits like the Child Tax Credit or American Opportunity Tax Credit, Form 8867 protects both you and your preparer from costly mistakes and IRS penalties.
Here’s what this means for you: Form 8867, “Paid Preparer’s Due Diligence Checklist,” is a form your tax professional must complete when preparing your return if you’re claiming specific tax credits. While you don’t fill out this form yourself, knowing about it helps you choose qualified preparers and verify they’re following proper procedures to maximize your credits while avoiding IRS issues.
At Greenback, we’ve prepared over 71,000 tax returns for expats and understand the critical importance of proper due diligence. When we complete Form 8867 for your return, you can trust that we’ve thoroughly verified your eligibility for valuable tax credits that can reduce your US tax liability to zero or generate refunds.
What Form 8867 Is and Why It Matters
Form 8867 is a mandatory checklist that paid tax preparers must complete and submit with your tax return when claiming these credits:
- Earned Income Tax Credit (EITC)
- Child Tax Credit and Additional Child Tax Credit
- Credit for Other Dependents
- American Opportunity Tax Credit (AOTC)
- Head of Household filing status
This form ensures your tax preparer has verified your eligibility and calculated the correct credit amounts. For expats, these credits can be especially valuable when combined with the Foreign Earned Income Exclusion or Foreign Tax Credit.
Why Form 8867 Protects You as an Expat
Prevents Costly Errors
The IRS imposes $635 penalties on preparers for each credit claimed without proper due diligence (for returns filed in 2025, up from $600 in 2024). If a preparer claims all covered credits and Head of Household status on one return and fails due diligence requirements, the penalty can reach $2,540 per return. Preparers who cut corners put both themselves and you at risk of audits, credit denials, and repayment demands.
Ensures Credit Maximization
Proper due diligence means your preparer has thoroughly reviewed your eligibility for all applicable credits. For expats, this is crucial because you might qualify for credits you didn’t know existed.
Reduces Audit Risk
Returns with properly completed Form 8867 demonstrate professional preparation and compliance, making them less likely to trigger IRS scrutiny.
What Your Tax Preparer Must Do
When completing Form 8867, qualified preparers must:
Interview and Document
Ask specific questions about your income, dependents, residency, and other eligibility factors. They must document your responses and keep records for three years.
Verify Information
Review supporting documents like birth certificates, Social Security cards, school records, and financial statements to confirm eligibility.
Calculate Accurately
Determine the correct credit amounts based on verified information and current tax law.
Submit Properly
Include the completed form with your tax return, whether filed electronically or on paper.
Key Questions Your Preparer Should Ask
For expats claiming tax credits, qualified preparers will ask detailed questions such as:
For Child Tax Credit:
- Where did your children live during the tax year?
- Do they have valid Social Security numbers?
- How long were you and your children outside the US?
For American Opportunity Tax Credit:
- Was the student enrolled at least half-time?
- Did you pay qualified education expenses?
- Has this credit been claimed for this student in previous years?
For Earned Income Tax Credit:
- Did you live in the US for more than half the year?
- What was your earned income versus investment income?
- Are you married filing separately?
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Red Flags: When Preparers Aren’t Following Due Diligence
Be cautious of tax preparers who:
- Don’t ask detailed questions about your dependents or income
- Promise large refunds without reviewing your documents
- Claim they don’t need to complete additional forms
- Discourage you from providing supporting documentation
- Rush through your tax preparation without proper verification
How Form 8867 Benefits Expat Families
- Maximizes Family Credits: The Child Tax Credit provides up to $2,000 per qualifying child, with up to $1,700 refundable. Proper due diligence ensures you claim every dollar you’re entitled to receive.
- Coordinates with Expat Benefits: Experienced preparers know how to coordinate family credits with expat-specific benefits like the Foreign Tax Credit for optimal tax savings.
- Protects Against Future Issues: Thorough documentation now prevents problems later if the IRS questions your credits or requests additional information.
Why Professional Preparation Matters for Expats
- Complex Eligibility Rules: Expat tax situations involve unique challenges like physical presence tests, foreign income reporting, and treaty considerations that affect credit eligibility.
- Coordination with Other Forms: Your preparer must properly coordinate Form 8867 with other expat forms like Form 2555 (FEIE) and Form 1116 (Foreign Tax Credit).
- Documentation Challenges: Living abroad can make it harder to obtain required documents. Experienced preparers know how to work with foreign-issued documents and alternative verification methods.
What to Expect from Qualified Preparers
When working with professional expat tax preparers like Greenback:
Thorough Interview Process
We ask comprehensive questions about your expat situation, family circumstances, and all potential credits.
Document Review
We carefully examine all supporting documents and help you obtain any missing items needed for proper verification.
Credit Optimization
We identify all credits you qualify for and ensure they’re properly coordinated with your expat tax benefits.
Compliance Assurance
Every applicable Form 8867 is completed accurately and submitted with your return.
Common Expat Credit Scenarios
Family with Children Abroad
Expat families often qualify for substantial Child Tax Credits while using the FEIE to exclude foreign earned income, potentially resulting in tax-free income plus refundable credits.
Students with US Education Expenses
American students studying abroad or expat parents paying US college costs may qualify for education credits that reduce taxes dollar for dollar.
Lower-Income Expats
Some expats may qualify for the Earned Income Tax Credit if they meet residency requirements, providing significant refundable credits.
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Choosing the Right Tax Preparer
Look for preparers who:
- Specialize in expat tax situations
- Ask detailed questions about your circumstances
- Explain Form 8867 requirements clearly
- Provide transparent pricing with no hidden fees
- Maintain proper records and documentation
Your Role in the Process
While your preparer completes Form 8867, you can help by:
- Providing Complete Information: Answer all questions honestly and thoroughly, even if they seem repetitive or detailed.
- Gathering Supporting Documents: Collect birth certificates, Social Security cards, school enrollment records, and financial statements as requested.
- Asking Questions: Don’t hesitate to ask why certain information is needed or how credits are calculated.
Getting Professional Expat Tax Help
Form 8867 requirements underscore the importance of working with qualified tax professionals who understand both general tax credit rules and unique expat situations.
Our team of CPAs and Enrolled Agents at Greenback has extensive experience preparing expat returns with proper due diligence. We complete all required forms accurately while maximizing your credits and ensuring full compliance.
You’ll have confidence knowing that every applicable credit has been thoroughly verified and properly claimed, protecting you from future IRS issues while minimizing your tax liability.
Next Steps
If you’re claiming tax credits on your expat return, ensure your preparer is following proper due diligence procedures. Ask specifically about Form 8867 and what documentation they need to verify your eligibility.
Remember: Proper due diligence protects both you and your preparer while ensuring you receive every tax benefit you’re entitled to claim.
Review your previous returns to see if you missed any credits you might have been eligible for. Many expats discover they can file amended returns to claim credits they didn’t know they qualified for.
Contact us, and one of our customer champions will gladly help. If you need very specific advice on your specific tax situation, you can also click below to get a consultation with one of our expat tax experts.
This information is for general guidance only. Tax credit eligibility can be complex, and professional consultation is recommended for your specific situation. All penalty amounts and requirements have been verified against current IRS sources as of January 2025.
