For this assignment you will be investigating the changes in several tax credits, forms, and schedules over time. (The form or schedule number will remain constant, but the form or schedule title may change based on changes to tax credits and what is required to be reported.) In your research you will be comparing these forms from different tax years to find any significant changes. Evaluating tax credits and supplemental forms requires an ability to search proficiently.
Compare Tax Credits and Corresponding Forms
Please follow this process for each of the forms and schedules required in this assignment:
Follow the example provided for Earned Income Tax Credit (EITC) in the Project One Milestone One template.
Pull up the form you are investigating from both the current and previous tax years (for instance, 2021 and 2020).
Search for any IRS publications that discuss changes in this tax credit.
Note any changes mentioned in the publication that impact the current year or may impact future years. It takes attention to detail to uncover these changes.
Compare the current tax year with the prior tax year.
Research the forms required for the respective tax years using the search terms below in the Supporting Materials section.
Complete the table for each type of tax credit.
Add a list of documentation and citations to the template provided.
This is the process a paid professional tax preparer uses each year as part of due diligence. As a professional tax preparer you will be responsible for knowing and applying changes from year to year. Consider what needs to be reviewed every tax year for each tax credit category. Check other qualifications or requirements for the credit. Consider how things might change in the future that impact tax planning.
Hint: Changes in requirement and parameter may include the following areas: amount of credit, income thresholds, qualified dependents, and/or filing status.
Specifically, you must address the following rubric criteria:
Form 8863 Education Tax Credit – American Opportunity Tax Credit (AOTC): Specify changes past, present, and future if applicable to this form.
Example of when this AOTC tax credit may apply using professional terms to describe client’s scenario
Changes to the form from year A to year B
Changes to areas to consider from year to year
Possible new developments and why they may occur
Form 8863 Education Tax Credit – Lifetime Learning Credit (LLC): Specify changes past, present, and future if applicable to this form.
Example of when this LLC tax credit may apply using professional terms to describe client’s scenario
Changes to the form from year A to year B
Changes to areas to consider from year to year
Possible new developments and why they may occur
Schedule 8812 Child Tax Credit: Specify changes past, present future if applicable to this form.
Example of when this child tax credit may apply using professional terms to describe client’s scenario
Changes to the form from year A to year B
Changes to areas to consider from year to year
Possible new developments and why they may occur
Schedule 8812 Other Dependent Credit: Specify changes past, present future if applicable to this form.
Example of when this other dependent credit may apply using professional terms to describe client’s scenario
Changes to the form from year A to year B
Changes to areas to consider from year to year
Possible new developments and why they may occur
Form 2441 Child and Dependent Care Credit: Specify changes past, present future if applicable to this form.
Example of when this Child and Dependent Care Credit may apply using professional terms to describe client’s scenario
Changes to the form from year A to year B
Changes to areas to consider from year to year
Possible new developments and why they may occur
Identify applicable documentation for each of the tax credit categories.
Document retention is part of form 8867 for due diligence
Different types of forms or documents depend on the type of tax credit
What to Submit
Submit a completed Project One Milestone One template. Sources should be cited and linked according to APA style.
forms and documents
https://www.irs.gov/pub/irs-pdf/f8863.pdf
https://www.irs.gov/forms-pubs/about-form-8863#:~:text=Use%20Form%208863%20to%20figure,Learning%20Credit%2C%20which%20is%20nonrefundable.
https://www.irs.gov/pub/irs-pdf/f1040s8.pdf
https://www.usa.gov/child-disaster-tax
https://www.irs.gov/pub/irs-pdf/f2441.pdf
