Question

Devin is a paid tax return preparer. In 2025, she filed a taxpayer’s tax return, in which the taxpayer claimed the American Opportunity Tax Credit. However, the IRS determined that the taxpayer did not qualify for the credit. What amount of penalty could Devin be responsible for if it is determined that she failed to exercise due diligence in the preparation of this tax return?
$600
$635
$2,400
$5,000Devin is a paid tax return preparer. In 2025, she filed a taxpayer’s tax return, in which the taxpayer claimed the American Opportunity Tax Credit. However, the IRS determined that the taxpayer did not qualify for the credit. What amount of penalty could Devin be responsible for if it is determined that she failed to exercise due diligence in the preparation of this tax return?
$600
$635
$2,400
$5,000

Answer 1

$635

Explanation: Under IRC §6695(g) a paid preparer who fails to exercise due diligence for education credits (including the American Opportunity Tax Credit) is subject to a per‑return penalty (amount adjusted annually). For 2025 that per‑return penalty is $635.