Final answer:
Tax preparers who do not comply with the due diligence requirements for the California Earned Income Tax Credit may face a $500 penalty. The EITC helps low-income families with variable tax credits based on income and family size.
Step-by-step explanation:
EITC Penalty for Tax Preparers
The amount of the penalty for tax preparers who fail to meet the due diligence requirements for the California Earned Income Tax Credit (EITC) is $500. It's crucial for tax professionals to understand the importance of compliance with EITC regulations to avoid such penalties. The EITC itself is a powerful tool for aiding low-income workers and families, providing substantial tax credits based on income and number of children. The tax credit amount increases with earned income up to a certain point, after which it slowly phases out to avoid a poverty trap, where earning more could lead to disproportionately losing benefits.
According to the given information, the penalty amount for tax preparers who have not complied with all the due diligence requirements for the California Earned Income Tax Credit claimed is $500 (option c).