IRS Form 8862- How to Reclaim Your Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a valuable benefit for low to moderate-income working individuals and families. If the IRS has denied or disallowed your EITC claim in the previous year, you will have to file IRS Form 8862 before you can claim it again.
Earned Income Tax Credit Reclaim Process
What is the Earned Income Tax Credit?
The EITC is a refundable tax credit offered by the IRS to help low to moderate-income workers and families get a tax break. It will reduce the amount of tax you owe and in many cases provide a refund.
To qualify –
- Your income must be earned from employment or self-employment.
- Meet the certain thresholds
- There must be a valid Social Security Number
- File a tax return
The amount of credit you receive depends on your income, marital status, and number of qualifying children.
Reasons why the IRS will deny or disallow your EITC
- You claimed a child who does not meet the EITC qualification criteria.
- Incorrect or mismatched information
- You do not have earned income
- Your income was too high
- Fraud or reckless claims in the past returns.
If the claim is disallowed, the IRS will send a letter 105C or another notice explaining the issue. If disallowed once you have to claim the EITC by first filing the IRS
Form 8862.
What is IRS Form 8862?
IRS Form 8862 is the Information To Claim Certain Credits After Disallowance. The form is used to reinstate your eligibility to claim the EITC after it was previously disallowed or denied. The IRS Form 8862 purpose is to serve as proof that you now meet all the requirements for the credit and help the IRS verify your eligibility.
Who and How to File IRS Form 8862?
IRS Form 8862 for EITC Reclaim must be filed with a tax return for the year you want to reclaim the EITC. It cannot be filed separately.
It must be filed if-
- You previously acclaimed the EITC and it was disallowed or reduced
- You receive a notice from the IRS indicating that you are barred from claiming the EITC again unless you file this form.
- You meet the eligibility requirements and want to reclaim the credit.
The firm can be filed either electronically or through mail by attaching the completed form to Form 1040 and send to the IRS.
IRS Form 8862 Reclaim credit steps
- Check the box for the credit you are claiming (EITC), and state the year in which the credit was disallowed. Confirm you meet all the requirements now and that you are not barred due to reckless or intentional disregard.
- For Earned income credit you need to fill in your filing status, the number of qualifying children, and whether any qualifying child meets the relationship residency and age tests. IRS may request documentation so be prepared to provide school or medical records, lease agreements, income proof, and social security cards.
- While filling out the form you have to read IRS Form 8862 instructions completely. Incorrect filing can delay your tax refund or result in another denial. Avoid the common errors like forgetting to attach Form 8862, filing it without a disallowance notice, providing incomplete or false information, claiming a child who does not qualify, or not qualifying your tax return to reflect current income. It is advisable to consult a professional tax professional to help you fill out the form accurately.
What happens after you file your Form 8862?
Once the tax return is submitted along with Form 8862, the IRS will review the claim. The processing will take up to 8 weeks or longer if documentation is needed. If approved; your EITC will be issued as part of your tax refund. If denied, you will receive a notice explaining why and whether you may appeal. If there are EITC-related verifications, the IRS will hold the refund longer.
What are some of the things to consider ensuring EITC approval?
To minimize the chances of reclaiming EITC with IRS Form 8862 you will have to-
- Double-check qualifying child rules- Age, Residency, and Relationships
- Keep the documentation ready with income proof, child residency, and more.
- Use tax software or a tax preparer who is familiar with the EITC rules
- Review the IRS letter carefully as it contains important guidelines
- Do not rush and take time to verify all information before filing.
If your claim is rejected again, you can request an appeal through the IRS Office of Appeals.
What are the instructions in IRS Form 8862?
- Check the box for the credit you are reclaiming.
- Write the year when the credit was disallowed.
- Confirm you meet all the current eligibility needs.
- Confirm you are not barred from claiming due to reckless or fraudulent behavior.
- Choose your filing status.
- Indicate the number of qualifying children.
- Answer questions about your children like they lived with you for more than half the year and they meet the age, relationship, and residency norms.
How a professional tax expert will help file IRS Form 8862 to reclaim your EITC?
- Understanding your eligibility: The tax expert will review why your EITC was previously denied. They will explain the Form 8862 eligibility requirements and rules for claiming ETC again. Also, determine if you are required to file Form 8862 or not. Also, check if you are permanently barred or only need to fix previous errors.
- Analyze the IRS letters and notices: The experienced tax personnel will interpret IRS disallowance letters like Letter 105 C or audit findings. They will help you understand what went wrong in the previous return and match IRS concerns with the correct responses on Form 8862.
- Guiding Through EITC Rules: The tax professional will clarify the EITC qualifications including income limits, filing status, and child eligibility. They will explain the complicated terms like residency test, earned income, or qualifying child. Also, they will ensure the applicant how to meet all the criteria before filing the form.
- Accurate Completion of Form 8862: Filing the Form 8862 can be challenging for many. The professional tax expert accurately fills out each section making things hassle-free for the applicant. They fill in every part including the basic information year of disallowance and child and income eligibility details.
- Collecting and Organizing Documents: The professional helps you gather the correct documents including the child’s residency proof, proof of relationship and age (birth certificates), and income records. They prepare the documents in a way that the IRS prefers faster approval.
- Avoiding errors that delay refunds: The professional ensures the return includes calculation or factual errors. They double-check all the forms and attachments before submission. The tax expert also verifies security numbers and filing status to prevent rejection.
- Dealing with the IRS: They also deal with the IRS on your behalf if any queries arise after filing the form. They handle audits or further document requests professionally and quickly. They will also help you respond to the IRS notices if your EITC is delayed or under review.
- Proper Submission with Tax Return: They ensure that your Form 8862 is submitted with your tax return and not separately. They will use reliable e-filing software or secure mail options for faster processing. Also, they make sure you get a copy of the full return for your records.
- Peace of Mind and Confidence: When you have a right and reliable tax professional handling your EITC reclaim process, you will have peace of mind that your filing is accurate, complete, and compliant. This will reduce your stress of dealing with IRS rules and paperwork. The professional tax experts will speed up your chance of getting your EITC refund.
- Long-Term Tax Planning: The tax expert will advise you on how to avoid disallowance in the future. They will help maintain proper records all year round for tax-time success. They will also suggest strategies to maximize your credits and refunds every year.
The Earned Income Tax Credit or EITC can make a great financial difference for working families. If your EITC was denied in the previous year, Form 8862 gives you a chance to reclaim it- but only if you meet all the eligibility requirements for the current year.
By submitting Form 8862 with your tax return, you are telling the IRS that you are eligible now, and here is the proof. If the IRS is satisfied with your details, you will get the credit and refund without any issues.
FAQs
1. When is IRS Form 8862 required?
IRS Form 8862 is required when your Earned Income Tax Credit (EITC) was previously denied or reduced and you want to claim it again.
2. Can I file IRS Form 8862 separately from my tax return?
No, IRS Form 8862 must be submitted with your federal tax return. You cannot file it as a standalone document.
3. What happens if I do not file IRS Form 8862 when required?
If you fail to file Form 8862 when required, the IRS will deny your EITC again, even if you are eligible. Work with a right tax expert like EZ Tax Works to ensure filing the Form 8862 when required.
4. Do I need to file Form 8862 every year after a denial?
No, you only will need to file Form 8862 once after a denial- unless the IRS disallows your credit again in the future.
5. What if my EITC was denied due to a calculation error- Do I need to Form 8862?
No, if it was denied due to calculation or clerical error, you do not need to file Form 8862. Working with a professional tax expert like EZ Tax Works will help you file your IRS Form accurately.
6. Can I claim EITC without a qualifying child after being denied previously?
Yes, in most cases you do not need to file Form 8862 if you are now claiming EITC without a qualifying child and the earlier denial was only for a child-related issue.
7. What are the documents required for filing IRS Form 8862?
Documents like income proof, child residency records, birth certificates, and social security cards are required to support your eligibility in case the IRS asks. The experienced tax professional of EZ Tax Works will help you collect all the documents required for filing.
8. How long does it take for the IRS to process the Form 8862?
It may take up to eight weeks or longer for the IRS to process Form 8862, especially if your return is selected for additional review or audit.
