Form 3596: California Paid Preparer’s Due Diligence Checklist for CalEITC (2022/2025)

Form 3596, officially titled Paid Preparer’s Due Diligence Checklist for California Earned Income Tax Credit, is a compliance document issued by the California Franchise Tax Board. It isn’t something taxpayers fill out on their own — it exists specifically for paid tax preparers who help clients claim the California Earned Income Tax Credit (CalEITC), the Young Child Tax Credit (YCTC), or the Foster Youth Tax Credit (FYTC) on a California return.

Think of it as a documentation trail. The FTB wants proof that a paid preparer actually asked the right questions and verified eligibility before signing off on a return that includes one of these refundable credits. Because these credits can result in a refund even when little or no tax is owed, they’ve historically been a target for fraud and preparer errors, so the state requires this extra layer of due diligence to be recorded in writing.

Who Needs to File Form 3596

This form applies only to paid preparers — not to individuals preparing their own returns, and not to volunteer preparers working through free assistance programs. If you’re a CPA, enrolled agent, or any compensated tax professional preparing a California return that claims CalEITC, YCTC, or FYTC, you’re required to complete and retain Form 3596 for that client’s file.

The checklist walks through questions about the client’s earned income, residency, qualifying children (if applicable), and other eligibility factors tied to each credit. The preparer has to confirm that reasonable inquiries were made and that the information reported on the return is consistent with what the client provided, and consistent with what the preparer knows or should know.

When and How It’s Used

Form 3596 gets completed at the same time the return is prepared — it’s not a separate filing sent to the FTB on its own. Instead, the preparer keeps it in the client’s records, similar to how the IRS treats its own paid preparer due diligence requirements for the federal EITC. If the FTB later questions a credit claim, or audits a preparer’s practice, this checklist is the paper trail that shows due diligence was performed.

Preparers should keep completed copies of Form 3596 for at least four years, matching the FTB’s general recordkeeping guidance for supporting tax documents. Each qualifying return needs its own checklist — you can’t rely on a single form to cover multiple clients or multiple tax years.

Getting and Completing the Form

The form is available directly from the FTB website as a fillable PDF, which makes it easy to complete on a computer and save digitally rather than printing and filling it out by hand. Because it’s an AcroForm, preparers can type responses directly into the fields, which speeds things up when handling multiple clients during filing season.

Filling it out mostly involves checking boxes and confirming basic facts: whether the taxpayer had earned income, whether a qualifying child meets residency and relationship tests, and whether the preparer reviewed supporting documents rather than just taking the client’s word for it. There’s no calculation involved — it’s purely a due diligence record, not a worksheet that affects the tax liability itself.

Professionals who regularly deal with state-specific credit forms know how much documentation can vary from one state to another. If you’re used to handling refundable credit claims in other jurisdictions, it’s worth comparing how states structure similar credits — for instance, New York’s Claim of Right Credit or its Nursing Home Assessment Credit follow very different verification rules than California’s EITC-related credits, even though the underlying goal of preventing improper claims is the same.

Preparers who fail to complete or retain Form 3596 when required can face penalties under California law, separate from any penalty tied to an incorrect credit claim itself. So even if a client’s return turns out to be accurate, missing paperwork on the preparer’s side can still create problems during a review.