Form 8862 allows taxpayers to reclaim tax credits that were denied on their previous tax returns due to circumstances with the Internal Revenue Service (IRS) that have now been resolved.
How does Form 8862 work?
You must include IRS Form 8862 (“Information to Claim Certain Credits After Disallowance”) with your tax return if your claim for the Earned Income Tax Credit (EITC) or Child Tax Credit or Additional Child Tax Credit or Credit for Other Dependents or American Opportunity Tax Credit has been denied. Submitting this form will allow you to reclaim any of these credits.
Who uses Form 8862?
Anyone whose claim for any of the above tax credits was denied for a reason other than a math or clerical error, who now meets all the requirements to claim the credit, must file Form 8862. The IRS specifies that you must file this form if:
- Your claim for the EITC was reduced or denied in any year after 1996.
- Your claim for the Child Tax Credit or Additional Child Tax Credit or Credit for Other Dependents or American Opportunity Tax Credit was reduced or denied in any year after 2015.
You cannot claim those credits again for at least two years if your claim was denied by the IRS due to “willful disregard of the rules.” You cannot claim those credits for 10 years if your claim was denied because of fraud.
Where can I get Form 8862?
The easiest way to obtain Form 8862 is to download it from the IRS website. A professional tax preparation company or tax preparer will provide you with this form if you used one. The tax software will automatically complete this form based on the information you enter if you are preparing your tax return online.
How to fill out and read Form 8862?
Form 8862 has five parts:
- Part 1: For all filers
- Part 2: Earned Income Tax Credit
- Part 3: Child Tax Credit / Additional Child Tax Credit / Credit for Other Dependents
- Part 4: American Opportunity Tax Credit
- Part 5: Qualifying Child for More Than One Person
All filers must complete Part 1. You should fill out the other sections that pertain to the specific credit or credits you are claiming. Very few taxpayers will need to reclaim all of these credits, so be sure not to complete a section for a credit you are not entitled to.
The final part applies to children who can be claimed on the tax return of more than one person, such as divorced or separated parents. You will need to refer to the IRS rules on determining children to figure out who should claim the children in this situation.
Can Form 8862 be filed online?
Yes, you can include this form with the rest of your tax return when filing online. All online tax preparation software provides this form, although it may not be included in the free versions.
Where can I send Form 8862 by mail?
If you received a notice from the IRS stating that you must file this form, the letter will also include an address to send it to.
How to submit Form 8862?
You can include this form if you are e-filing your tax return, or you can send it by mail to the address specified in the letter if you received a separate notice requiring you to complete the form. In any case, you are not required to sign Form 8862.
Benefits of Form 8862
Filing Form 8862 allows taxpayers to start anew with the IRS in a sense. It shows that the taxpayer has corrected the circumstances that led to the IRS disallowing these credits, and that they are now eligible to claim them again.
Questions
Frequently Asked Questions (FAQs)
Do I need to submit Form 8862 every year?
You only need to submit Form 8862 once unless your claim for one of these credits is denied a second time. In that case, you will need to resubmit the form to rectify the situation.
What happens when the IRS denies a claim for one of these credits?
Unlike deductions, tax credits are deducted directly from the amount you owe to the IRS when you complete your tax return. The denied credit will be added back to your balance if the IRS denies your claim. This can reduce your expected refund amount, eliminate it entirely, or increase the tax owed.
Source: https://www.thebalancemoney.com/irs-form-8862-5183816
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