Reclaim Your Tax Credits with the IRS Form 8862

Errors on tax returns happen and when they do, you experience refund delays. When the error is made while claiming your Earned Income Tax Credit (EITC), you might have to wait a little longer to receive your part of the refund. The wait might last months, if not weeks. In some cases, mistakes on the EITC part of your tax return could lead to the IRS denying your entire credit.

When that happens, you might have to file Form 8862. This form must always be included in your tax returns if you’ve been denied the EITC, as well as an additional tax credit, child tax credit, American opportunity tax credit or credit for other dependents.

Understandably, you want to get those tax credits ASAP to pay bills, sustain the needs of your children or even start a small business. However, it pays to pause and know about the form first.

What is the 8862 Tax Form?

As mentioned above, the IRS Form 8862 TurboTax is required if your EIC was disallowed or reduced. To regain your tax credits, you must file the 8862 form first.

The form is composed of five parts:

  1. All Filers
  2. American Opportunity Tax Credit
  3. Child Tax Credit/Additional Child Tax Credit
  4. Earned Income Credits
  5. Qualifying Child of more than one person

8862 forms are often used when there are errors in claiming EITC, which is a common occurrence. Most of these errors are connected to claiming kids who don’t meet the qualifications, which include the following:

  • Be under 19 years old. In some cases, they must be under the age of 24 if they were a full-time student for at least five months. However, if the child has disabilities, age is not a requirement.
  • Have a valid Social Security number.
  • Be related to you. If the child is not biologically related to you, they must at least be legally adopted or placed under your care by the government or any licensed organization.
  • Live in the same house as you in the US for more than six months of the tax year.

Here’s an example: your 17-year daughter decided to move out of your home in April 2020. You tried to claim the EITC on 2021’s tax return, but the IRS said no because your child didn’t meet their qualifications. If your daughter, who is now 18 years old, decides to move back with you in May 2022, you must file Form 8862 with your 2022 tax return to prove that you’re eligible for tax claim credits.

Why Do I Need the Form 8862 on TurboTax?

If you have been previously denied any of the tax credits listed above for anything other than a clerical or math error, you must file the 8862 form (as long as you meet all the requirements, too). According to the IRS, you must fill this form if:

  • Your claim for the American opportunity tax, additional tax credit, child tax credit or credit for other dependents was disallowed or reduced a year after 2015.
  • Your EITC was disallowed or reduced for a year after 1996.

However, if the IRS denied your claim for intentional or reckless disregard of their rules, you’re not allowed to claim your credits for at least two years. If the IRS denied your claim due to fraud, you cannot claim your tax credits for 10 years.

On the other hand, you don’t have to file an IRS Form 8862 if:

  • You’re claiming the EITC with a child that doesn’t meet the IRS standards.
  • You’ve already filed the Form after being denied one or more of these credits in an earlier year.

Where Can I Get My Form 8862?

You can easily download the form from the IRS website. If you are using a tax preparation company or a professional tax preparer, they can get the document for you. If you’re preparing the form on your own, tax software can simplify things by completing the form based on the information you enter.

How Do I Fill Out Form 8862?

How do you file your IRS form 8862? (Photo by Nataliya Vaitkevich via Pexels)

To start filing your Form 8862, follow these steps:

  1. Enter your full name and Social Security number as shown on your current tax returns.
  2. Enter the year you’re filing for on the first line in Part 1. Check the right box on lines 2 and 3. If you checked “No” for both, proceed to Part 2 if your children are considered qualified. If they aren’t, proceed to Part 3.
  3. Enter the information concerning your qualifying kids in Part 2. The child or children must be the same kids listed on Schedule EIC for the year listed on line 1. Don’t forget to enter the number of days the kids lived with you during the year. If the child lived with you for less than 183 days, you can’t use them for EIC unless they were born or they died during that tax year. If this is the case, enter the year of death or birth of the child being used for EIC on lines 5a to 5c.
  4. Enter all the addresses where you and the child/children lived during the tax year on line 1 on lines 6a to 6c. If there were others who lived with you during that time, enter their name and their relationship to the child. Repeat this step for every child you’re claiming for EIC.
  5. In Part 3, write down the number of days that you or a spouse (if applicable) lived in the US if you don’t have kids qualified to claim the tax credit.

NOTE: If you filed the 8862 Form last year, you need not file it again unless you were disallowed from claiming the earned income credit the year before.

Can I File Form 8862 Online?

You can e-file this form with the rest of your tax returns. All online tax preparation platforms provide this form, although some don’t include the form in their free versions.

What are the Benefits of Filing a Form 8862 TurboTax?

If you need a “fresh start” with the IRS, filing Form 8662 is one of the best ways to do so. The form proves that the taxpayer has addressed the reasons behind the IRS disallowing or reducing their credits. It proves that you are now eligible to claim your credits.


The Bottom Line

The IRS Form 8862 enables you to reclaim tax credits again after being disallowed. The steps for filing are pretty straightforward, but if you need more assistance, get in touch with a trusted tax professional today.


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