What Is Form 8867 and How Does It Protect My Tax Return?

Form 8867 is a due diligence checklist that your paid tax preparer must complete when your return claims certain credits or filing statuses. You don’t fill it out yourself, but it directly protects you: it requires your preparer to verify your eligibility before claiming credits that could trigger IRS scrutiny if done incorrectly.

According to the IRS, Form 8867 is required whenever a paid preparer files a return claiming any of the following:

Earned Income Tax Credit (EITC) — worth up to $8,046 for families with 3+ children (2025)
Child Tax Credit/Additional Child Tax Credit (CTC/ACTC) — up to $2,200 per child (2025, per the OBBBA)
Credit for Other Dependents (ODC) — up to $500 per qualifying dependent
American Opportunity Tax Credit (AOTC) — up to $2,500 per eligible student
Head of Household (HOH) filing status

Your Return Deserves More Than Just Filing

We’ll apply every credit you qualify for — and document everything properly under IRS rules.

Here’s why this form matters for your return and what to look for when choosing a tax preparer.

Why Should I Care About a Form My Preparer Fills Out?

Form 8867 exists because the IRS found that many preparers were claiming credits their clients didn’t actually qualify for. The consequences fell on both sides: preparers faced penalties, and taxpayers had to repay credits plus interest when the IRS caught the errors.

For the 2025 tax year (returns filed in 2026), the IRS penalty for each due diligence failure is $650 per credit or status. A preparer who fails to verify all four credits and HOH status on a single return faces up to $2,600 in penalties. But the preparer penalty is only half the story. If the IRS later disallows a credit on your return, you’re the one who has to:

Repay the full credit amount plus interest
File Form 8862 to recertify eligibility before claiming the credit again
Potentially face a two-year ban from claiming that credit (or ten years if the IRS determines fraud)

A properly completed Form 8867 means your preparer has done the work to verify you truly qualify, reducing the risk that any of this happens to you.

What Does My Preparer Have to Do?

Under IRC Section 6695(g) and Treasury Regulation 1.6695-2, paid preparers must meet four specific requirements for each covered credit or filing status:

Requirement	What It Means for You
Complete Form 8867	Your preparer answers specific eligibility questions for each credit you’re claiming, based on information you provide
Complete the credit worksheets	Your preparer calculates the correct credit amounts using IRS worksheets (EIC worksheet, Schedule 8812, Form 8863)
Apply the knowledge requirement	Your preparer cannot ignore information that seems inconsistent or incorrect; they must ask follow-up questions
Retain records for three years	Your preparer keeps copies of Form 8867, supporting documents, and notes from your interview

The knowledge requirement is particularly important. If something on your return looks unusual, for example, claiming three qualifying children when you’re 25 years old, or reporting $20,000 in self-employment income with zero business expenses, your preparer is required to ask additional questions. A preparer who doesn’t ask follow-up questions in those situations is not meeting due diligence requirements.

Which Credits Matter Most for Expats?

Not all Form 8867 credits apply equally to Americans living abroad. Here’s how each one typically affects expats:

Credit	2025 Amount	Expat Eligibility	Key Restriction
Child Tax Credit	Up to $2,200/child	Available to most expat parents	Child must have SSN; taxpayer (or spouse if MFJ) must also have SSN (new OBBBA rule)
Additional Child Tax Credit (refundable)	Up to $1,700/child	Not available if you file Form 2555 (FEIE)	Must use Foreign Tax Credit instead of FEIE to claim this
Credit for Other Dependents	$500/dependent	Available for dependents who don’t qualify for CTC	Non-refundable; reduces tax owed but won’t generate a refund
EITC	Up to $8,046	Rarely available to full-time expats	Must live in the U.S. for more than half the year; cannot file Form 2555
AOTC	Up to $2,500/student	Available if paying U.S. qualified education expenses	Student must be enrolled at least half-time at eligible institution

The FEIE-ACTC conflict is the most important thing expats need to know here. If you use the Foreign Earned Income Exclusion (Form 2555) to exclude your foreign income, you cannot claim the refundable Additional Child Tax Credit. For families with children, this means the choice between FEIE and the Foreign Tax Credit is not just about which saves more on income tax. It’s about whether you can access up to $1,700 per child in refundable credits.

For a detailed comparison, see our guide on choosing between the FEIE and FTC.

How Do I Know If My Preparer Is Doing This Right?

You’ll never see Form 8867 in your tax documents (it’s filed with the IRS, not given to you). But you can spot whether your preparer is meeting due diligence requirements based on their process.

Signs your preparer is doing it right:

Asks detailed questions about your children’s residency, ages, and Social Security numbers
Requests supporting documents (birth certificates, school records, proof of residency)
Explains which credits you qualify for and why
Discusses whether FEIE or FTC is better for your family’s situation
Takes time to verify your circumstances rather than rushing through

Warning signs your preparer is cutting corners:

Promises a specific refund amount before reviewing your situation
Doesn’t ask about your children’s living arrangements or SSN status
Claims credits without requesting supporting documents
Can’t explain why you qualify (or don’t qualify) for a specific credit
Doesn’t discuss the FEIE/ACTC trade-off if you have children

What Changed for the 2025 Tax Year?

The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, made several changes that affect Form 8867 due diligence:

Change	Impact on Your Return
CTC increased to $2,200 per child (from $2,000)	Higher potential credit; now indexed for inflation going forward
Taxpayer SSN requirement	You (or your spouse if filing jointly) must now have a valid SSN to claim CTC/ACTC, not just the child
TCJA provisions made permanent	$200,000/$400,000 phase-out thresholds, $500 ODC, and $2,500 earned income floor for ACTC are now permanent
Due diligence penalty: $650/failure	Up from $635 (returns filed in 2025); reflects inflation adjustment for returns filed in 2026

The new SSN requirement is especially relevant for expat families with non-citizen spouses. If you’re married filing jointly, at least one spouse must have a valid Social Security number (not an ITIN) to claim the CTC or ACTC. Your preparer should verify this as part of their Form 8867 due diligence.

Why Professional Preparation Matters for Expats

Expat tax situations add layers of complexity to the credits covered by Form 8867. Your preparer needs to coordinate these credits with expat-specific forms and strategies:

Form 2555 (FEIE) vs. Form 1116 (FTC): The choice between these directly determines whether you can claim the refundable ACTC
Physical presence and bona fide residence tests: These affect both your FEIE eligibility and potentially your HOH filing status
Foreign-issued documents: Birth certificates, school records, and residency proofs from other countries may need additional verification
Multi-country situations: Digital nomads and families who moved during the year may have split residency that affects credit eligibility

At Greenback, our CPAs and Enrolled Agents handle these interactions every day. When we complete Form 8867 for your return, we’ve already analyzed whether the FEIE or FTC produces the better result for your family, verified that your children meet all qualifying tests, and confirmed that every credit is properly coordinated with your expat tax strategy.

No matter how late, messy, or complex your return may be, we can help. Contact us, and one of our Customer Champions will gladly help. If you need specific advice on your tax situation, you can also get a consultation with one of our expat tax experts.

Let an Expert CPA Handle the Compliance Checklist

We’ll handle the due diligence so your return is accurate, complete, and defensible.

This article is for informational purposes only and does not constitute tax advice. Credit eligibility rules are complex and subject to change. For guidance on your specific situation, contact Greenback to speak with an expat tax specialist.