Form 8862 allows taxpayers to reclaim tax credits that were disallowed on previous tax returns due to circumstances with the IRS that have now been resolved. This form can simplify the lives of taxpayers who are once again eligible to claim one of the credits listed above. But only taxpayers who have previously been denied one of these credits will need to use this form.
Let’s review the purpose of Form 8862, who has to file it, and how it can benefit you.
Definition and Examples of Form 8862
IRS Form 8862 (“Information To Claim Certain Credits After Disallowance”) must be included with your tax return if you have previously been denied the earned income tax credit (EITC), child tax credit, additional tax credit, credit for other dependents, or American opportunity tax credit. Filing this form will allow you to once again claim any of these credits.
The IRS says most errors in claiming the EITC are related to claiming children who don’t actually meet the qualifying rules, which include:
- Have a valid Social Security number
- Be under age 19, or under age 24 if they were a full-time student for at least five months of the year. If your child is permanently and totally disabled, they can be any age.
- Be related to you, legally adopted, or placed in your foster care by a government agency, licensed organization, or court order.
- Live in the same home as you in the United States for more than half the tax year.
- Not file a joint return, such as with their own spouse.
For example, let’s say your 17-year-old son moved out of your home in May 2020. You claimed the EITC on that year’s tax return, but the IRS disallowed it because your son no longer met the qualifying rules. If your son, now 18, moved back home in May 2021, you would need to file Form 8862 with your 2021 tax return to show that you’re once again eligible to claim the credit.
Who Uses Form 8862?
Anyone who has previously been denied any of the tax credits listed above for anything other than a math or clerical error, and who now meets all the requirements to claim the credit, will need to file Form 8862. The IRS specifies that you’ll need to file this form if:
- Your EITC claim was reduced or disallowed for a year after 1996.
- Your claim for the child tax credit, additional tax credit, credit for other dependents, or American opportunity tax credit was reduced or disallowed for a year after 2015.
If the IRS denied your claim for any of these tax credits for “reckless or intentional disregard of the rules,” you can’t claim them again for at least two years. If your claim was denied due to fraud, you can’t claim the credits for 10 years.
You don’t have to file Form 8862 if:
- You have already filed it after being denied one or more of these credits in an earlier year, and your claims have not been disallowed or reduced since then.
- You’re claiming the EITC without a qualifying child, and the only reason your EITC claim was previously denied was because a listed child was determined not to be a qualifying child.
Where to Get Form 8862
The easiest way to get Form 8862 is to download it directly from the IRS website. If you are using a professional tax preparer or tax preparation company, they will furnish this document for you. If you’re preparing your own return online, the tax software should automatically complete this form based on the data you enter.
How to Fill Out and Read Form 8862
Form 8862 has five parts:
- Part 1: 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 of more than one person
All filers should fill out Part 1. Then, you should only fill out the sections dedicated to the particular credit or credits that you’re reclaiming. Very few taxpayers will need to reclaim all of these credits, so make sure not to complete a section for a credit that you’re not entitled to. The final section applies to children who can be claimed on more than one person’s taxes, such as parents who are divorced or separated. In this case, you’ll need to refer to the tiebreaker rules to determine who should claim the children.
If you are having difficulty understanding Form 8862, you can download the form’s instructions from the IRS.
Can Form 8862 Be E-Filed?
Yes, you can include this form with the rest of your tax return when you e-file. Virtually all online tax preparation programs provide this form, although they may not include it in their free versions.
Where to Mail Form 8862
If you received a notice from the IRS saying that you need to file this form, the letter will also contain the address where you’ll need to send it.
How to File Form 8862
If you’re filing your tax return electronically, you can include this form. If you received a separate notice requiring that you complete this form, you can mail it to the address specified in the letter. Either way, you don’t need to sign Form 8862.
Benefits of Form 8862
In a sense, filing Form 8862 allows taxpayers to start over with the IRS. It shows that the taxpayer has rectified the circumstances that caused the IRS to disallow these credits, and is now eligible to claim them again.
- Form 8862 is required when the IRS has previously disallowed one or more specific tax credits. Filing this form allows you to reclaim credits for which you are now eligible.
- You can download Form 8862 from the IRS website, and can file it electronically or by mail.
- If your previous attempt to claim one of these credits was denied due to fraud or reckless disregard for the rules, you won’t be able to file this form or claim the credits for up to 10 years.