Claim the tax credits you deserve after disallowance by filing IRS Form 8862.
If you filed your tax returns and were denied any of the most common tax credits, you may have to file Form 8862 to receive the money you are owed or to claim those credits in the future.
The Internal Revenue Service and the federal government offer many tax credits to help hard-working American individuals and families get ahead. That boost of a few thousand dollars to your household budget in late winter or early spring can help you pay off past-due bills, pay down debt, or even cover past-due tax debt.
Some of the tax credits available include:
- Earned Income Tax Credit (IETC or EIC)
- Child Tax Credit (CTC) / Additional Child Tax Credit (ACTC)
- Tax Credit for Other Dependents (ODC)
- American Opportunity Tax Credit (AOTC)
Yet, if the IRS disallowed or reduced these tax credits on your tax return in a past year’s filing, you may have an extra hoop to jump through to claim the credit that is rightfully yours.
How to Know If You Need to File Form 8862 With Your Tax Return
If your EITC credit was reduced or disallowed in any year since 1996, or disallowed any of the other credits above since 2015, you may have to file Form 8862, “Information to Claim Certain Credits After Disallowance,” to prove your qualifications. If you believe the disallowance was an error, you can file form 8862 to claim the money.
- If you file taxes electronically and receive reject code 164-01, it means the IRS previously disallowed the earned income credit (EIC).
- If you filed electronically and received reject code IND-165-01, it means the IRS previously disallowed your CTC / ACTC or ODC claim.
- IRS reject code F1040-448 means you must file Form 8862 to claim the American Opportunity Tax Credit (AOTC) after disallowance.
If you file your tax returns by mail, you may receive an 8862 letter explaining why your tax return was rejected. In either case, you’ll need to file form 8862, electronically or by mail, with the appropriate proof explaining your qualification for the appropriate tax credits.
If you received a CP79 notice following an audit or a correspondence audit, you’ll need to show you qualify for these tax credits by filing form 8862 with your tax return.
If your credit was denied due to a math error or clerical error, you don’t have to file Form 8862. If you received IRS Notice CP74, you have been recertified for the Earned Income Credit and you don’t have to submit Form 8862 with your new claim.
How to File Form 8862
Filing requirements vary depending on which tax credit or credits you’re claiming. Find out how to claim each type of tax credit below.
Claiming the EITC After Disallowance
Roughly one-third of people who previously didn’t qualify for the EITC had a change of circumstances, such as new children in the family or a pay cut at their job, that now allows this refundable credit. If you previously made a mistake on your tax returns and the credit was disallowed, but your circumstances have changed, it’s important to file 8862 if you now qualify for the credit.
You can learn more about filing Form 8862 to receive the EITC credit here.
Claiming the CTC / ACTC or ODC After Disallowance
You use the same form to claim CTC, ACTC, or ODC after disallowance as you do to reclaim the EIC. First, check the appropriate box for the credits you are claiming. You can use the same form to claim multiple tax credits.
To claim the CTC, ACTC, or ODC, skip to Part III after filling out part 1. Enter the names of each child in section 12. To claim more than four children, attach a separate statement and answer the same questions.
In section 13, enter the names of other dependents.
When you fill out sections 14 through 17, make sure that children or other dependents meet the requirements as a qualifying dependent.
As an overview, the child must:
- Be under age 17 at the end of the year
- Be a relative by blood, marriage, adoption or foster relationship
- Have lived with you more than half the year
- Provided no more than half their own financial support throughout the year
- Be a dependent on your tax return
- Be a U.S. citizen, U.S. national, or U.S. resident alien with a Social Security number valid for employment in the U.S.
Other dependents must meet these requirements except the maximum age.
If you are confused about qualification requirements, it’s a good idea to speak with a tax preparer who can guide you through filing.
Claiming the AOTC After Disallowance
To claim the AOTC, fill out Part IV on Form 8862. You can add more than three students by attaching a separate statement.
Note that you or other students in your household may qualify if you or they have been enrolled at least half time for at least one academic period for that tax year and have not finished the first four years of higher education at the start of the tax year.
You cannot claim the AOTC if you claimed it or the Hope Scholarship Credit for any of the four prior tax years. Answer questions 19a and 19b to determine the qualifications of students in your household.
Conclusion
Filing Form 8862 properly minimize delays to processing your tax refund and put extra cash in your pocket through fully or partially refundable tax credits designed to help working-class families.
Alleviate Tax is always here to help you reduce your tax debt and take control of your financial future.
FAQs
How do I submit form 8862 to the IRS?
You can file form 8862 electronically by using the fillable PDF from the IRS and attaching the file to your tax return or by printing IRS Form 8862 and mailing it along with your tax return. Filing electronically may lead to faster processing so that you can receive your refund sooner.
What is IRS Notice CP74?
IRS Notice CP74 states that you have been recertified to claim the Earned Income Tax Credit. You do not need to submit Form 8862 with your tax return to claim the EITC. You might receive form CP74 following a correspondence audit after your EITC was previously disallowed or reduced.
