Form 8862: Information To Claim Certain Credits After Disallowance (2016)
What Form 8862 Is For
Form 8862, "Information To Claim Certain Credits After Disallowance," is an IRS form you must complete when you want to claim certain tax credits again after the IRS previously denied or reduced them. Think of it as a "recertification" form that proves you now meet all the requirements for credits you couldn't properly claim before.
For the 2016 tax year, Form 8862 applies to three major refundable tax credits: the Earned Income Credit (EIC), the Child Tax Credit and Additional Child Tax Credit (CTC/ACTC), and the American Opportunity Tax Credit (AOTC). These credits can significantly reduce your tax bill or even result in a refund, but the IRS requires extra documentation if you've had problems claiming them in the past.
The form doesn't automatically get you the credit—it simply opens the door to claim it again. You must still complete all the regular forms and schedules for each credit (such as Schedule EIC for the Earned Income Credit) and meet all current eligibility requirements. Form 8862 acts as proof that you understand the rules and are making a legitimate claim this time around.
When You’d Use Form 8862 (Late/Amended Returns)
You must file Form 8862 with your 2016 tax return if both of these conditions apply: (1) your EIC, CTC/ACTC, or AOTC was reduced or disallowed for any reason other than a math or clerical error in a previous year, and (2) you now want to claim that credit again and meet all the requirements.
Important Exceptions — When You Don’t Need Form 8862
- You previously filed Form 8862 (or other required documents), your credit was then allowed, and it hasn't been denied again (except for math errors)
- You're claiming the EIC without a qualifying child, and the only reason it was denied before was because a child you listed wasn't your qualifying child
- You're still within a ban period (discussed below)
Ban Periods
Ban periods are critical: If the IRS determined your claim was due to reckless or intentional disregard of the rules, you cannot claim the credit for 2 years after that determination. If it was due to fraud, you're banned for 10 years. You cannot file Form 8862 during these ban periods—you simply cannot claim these credits at all.
Amended Returns and SSNs
For amended returns: If you didn't have a required Social Security Number by the original filing deadline (including extensions), you cannot file an amended return to claim these credits later, even if you get the SSN afterward. The deadline is absolute.
Key Rules for 2016
Social Security Number Requirements
Social Security Number requirements: You, your spouse (if filing jointly), and any qualifying children must have valid SSNs issued by the Social Security Administration by the due date of your 2016 return (including extensions). Individual Taxpayer Identification Numbers (ITINs) don't qualify for the EIC, though they work for CTC/ACTC and AOTC. This is a hard deadline—no exceptions.
Income Limits for 2016
Income limits for 2016: For the EIC, your adjusted gross income (AGI) must be less than $47,955 ($53,505 married filing jointly) with three or more qualifying children; $44,648 ($50,198 MFJ) with two children; $39,296 ($44,846 MFJ) with one child; or $14,880 ($20,430 MFJ) with no qualifying child.
Investment Income Cap
Investment income cap: Your investment income cannot exceed $3,400 in 2016. Investment income includes taxable interest, tax-exempt interest, ordinary dividends, capital gains, and certain royalty and rental income from personal property.
Filing Status Restriction
Filing status restriction: You cannot use married filing separately status if you want to claim these credits. However, if you're married but your spouse didn't live with you for the last six months of 2016, you may qualify to file as head of household instead.
Residency Requirements
Residency requirements: You must be a U.S. citizen or resident alien for the entire year (with limited exceptions for married couples). You cannot file Form 2555 or 2555-EZ (foreign earned income exclusion forms).
Step-by-Step Filing Process (High Level)
Step 1: Determine If You Need the Form
Review your IRS notices to confirm your credit was actually disallowed (not just reduced due to a math error). Check if you're in a ban period.
Step 2: Gather Documentation
Collect birth certificates, school records, medical records, and other documents proving your qualifying children lived with you for more than half of 2016. Gather proof of residency (utility bills, lease agreements), proof of relationship, and age documentation.
Step 3: Complete Part I
Enter 2016 on line 1 (the year you're claiming the credit, not the year it was denied). Check the boxes on line 2 for each credit you're claiming—EIC, CTC/ACTC, or AOTC.
Step 4: Complete the Applicable Parts
Part II is for the Earned Income Credit (Section A if you have qualifying children, Section B if you don't). Part III is for Child Tax Credit. Part IV is for American Opportunity Tax Credit. Part V addresses situations where a child could be claimed by multiple people.
Step 5: Attach Form 8862 to Your Complete Tax Return
You must also attach all regular forms for the credits you're claiming (Schedule EIC, Schedule 8812, Form 8863, etc.).
Step 6: File and Expect Delays
Returns claiming EIC or ACTC cannot receive refunds before February 15, and returns with Form 8862 typically face additional scrutiny and processing delays.
Common Mistakes and How to Avoid Them
Mistake #1: Filing Form 8862 When You Don't Need It
If your credit was denied only due to a math error, don't file this form—you'll actually slow down your refund. Check your IRS notice carefully.
Mistake #2: Missing the SSN Deadline
Waiting until after you file to get Social Security Numbers is too late. Apply for SSNs well before the filing deadline. If you need more time, file Form 4868 for an automatic six-month extension.
Mistake #3: Incomplete Documentation
The IRS will likely request proof of eligibility. Keep school records, medical records, childcare statements, and other documents showing where your children lived. Don't throw these away after filing.
Mistake #4: Entering the Wrong Year on Line 1
Line 1 should show "2016" (the year you're claiming the credit), not the year your credit was denied. Many taxpayers get this backward.
Mistake #5: Filing During a Ban Period
If you received a CP79A notice (2-year ban) or CP79B notice (10-year ban), don't file Form 8862 until the ban expires. The IRS will automatically reject your claim and may impose the erroneous claim penalty ($545 in 2016).
Mistake #6: Not Completing All Required Forms
Form 8862 alone doesn't get you the credit. You must also complete Schedule EIC, Schedule 8812, Form 8863, or whatever forms normally apply to your credit claim.
Mistake #7: Claiming a Child Who Doesn't Meet All Tests
Your child must meet relationship, age, residency, and support tests. Read the instructions carefully. The residency test requires more than half the year—not exactly half.
What Happens After You File
Extended Processing Time
After you file your return with Form 8862, expect significant delays compared to typical returns. The IRS flags all returns with Form 8862 for additional review. Your refund will take longer—often several months rather than the typical 21 days for e-filed returns.
Potential Audit or Examination
The IRS frequently sends CP75 or CP75A notices requesting additional documentation to verify your eligibility. You may need to provide school records, medical records, landlord statements, or other proof that your qualifying children lived with you.
Refund Delays for EIC/ACTC
By law, the IRS cannot issue refunds for returns claiming the Earned Income Credit or Additional Child Tax Credit before mid-February, even if you file in January. This applies to your entire refund, not just the credit portion.
Three Possible Outcomes
- Your credit is approved, and you receive your full refund;
- The IRS requests more information before deciding; or
- Your credit is denied again, and you may face a ban period or erroneous claim penalty if the IRS determines you knowingly filed an improper claim.
Recordkeeping
Keep copies of everything: Maintain copies of your tax return, Form 8862, and all supporting documents for at least three years. If the IRS contacts you, you'll need to respond within the timeframe specified in their notice (typically 30-60 days).
FAQs
Do I need Form 8862 if I'm claiming these credits for the first time?
No. Form 8862 is only required if a credit was previously disallowed. First-time claimants just complete the regular credit forms.
Can I e-file Form 8862?
Yes, Form 8862 can be e-filed with your return. However, be prepared for additional IRS scrutiny regardless of filing method.
What if I'm in a ban period but need the credit desperately?
Unfortunately, there's no hardship exception. Ban periods are mandatory and cannot be waived or shortened. Focus on ensuring you meet all requirements when the ban expires.
How do I know if my previous disallowance was for math error or something else?
Check the IRS notice you received. Math error notices (CP10, CP11, CP12, CP13) specifically say "math error." Other notices (CP09, CP75, audit letters) indicate substantive disallowances requiring Form 8862.
What's the difference between the 2-year and 10-year ban?
A 2-year ban results from "reckless or intentional disregard" of the rules (you should have known better). A 10-year ban results from fraud (deliberately lying to get the credit). The IRS determines which applies.
Do I need separate Forms 8862 for each credit?
No. One Form 8862 covers all applicable credits. Just check all boxes on Line 2 that apply to your situation.
What if my qualifying child situation has changed since the disallowance?
That's fine. Form 8862 asks about your current year situation (2016), not the year your credit was denied. If you now have different qualifying children or meet requirements you didn't before, explain that on the form.
For More Information
For more information and official forms, visit IRS.gov/Form8862.
