What is Form 8862 for?
Form 8862 (2018) allows taxpayers to reclaim certain credits that were previously disallowed or reduced by the Internal Revenue Service. This tax form must be completed and attached to an income tax return when taxpayers claiming the Earned Income Credit, Child Tax Credit, Additional Child Tax Credit, Credit for Other Dependents, or American Opportunity Tax Credit were denied those benefits in a previous tax year. The form serves as proof that you now meet eligibility requirements for these refundable credits and have corrected the issues that caused the previous denial or reduction.
When You’d Use Form 8862
Taxpayers must file Form 8862 if their earned income credit, child tax credit (CTC), additional child tax credit, or other refundable credits were previously disallowed for any reason other than a math or clerical error. This applies whether you are filing jointly or as a single taxpayer. If your credit was denied for reckless or intentional disregard of the rules, you must wait two years before filing. A federal or state felony for fraud results in a ten-year ban. After your ban ends or the final determination has cleared, you can attach a completed form to your next tax return.
Key Rules or Details for 2018
- Valid Social Security Number: Each qualifying child or eligible foster child must have a valid Social Security Number issued before the return’s due date to claim certain credits.
- Residency requirements: A qualifying child must live with you in the United States for more than half of the tax year, including time away for school or extended active duty.
- Income limits: The Earned Income Credit and other dependent credits phase out as earned income or investment income increases. Review the IRS guidelines for your filing status.
- Eligible students: To qualify for the American Opportunity Tax Credit or Hope Scholarship Credit, the student must be enrolled at least half-time in a recognized educational credential program for an academic period beginning in 2018.
- CTC and ODC phase-outs: Phase-outs for the refundable Child Tax Credit, Additional Child Tax Credit, and Credit for Other Dependents begin at $200,000 for single filers and $400,000 for those filing jointly.
- IRS Form 1040 requirement: For 2018, Form 8862 must be attached to the redesigned Form 1040 rather than older forms such as Form 1040A or Form 1040EZ.
- Previous year eligibility: If your credits were previously reduced but you now meet the qualifications, you may claim them again by providing the proper documentation and completing this form.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
Step 1: Determine your need to file Form 8862
Check any IRS notice from a previous tax year to confirm that your earned income credit, child tax credit, or other dependents' credit was previously disallowed for more than a clerical error.
Step 2: Complete Part I – General information
Indicate the tax year, your filing status, and which certain refundable credits you are claiming. Provide taxpayer identification numbers and verify your earned income for the current year.
Step 3: Complete Part II – Earned Income Credit section
Answer questions about your qualifying child or children. Include information for each foster child, half-brother, or half-sister who meets the requirements and has a valid Social Security Number.
Step 4: Complete Part III – Child Tax Credit and Credit for Other Dependents
List each qualifying child or dependent. Indicate their age, relationship, and whether they lived with you for more than half of the year to qualify for the CTC or additional child tax credit.
Step 5: Complete Part IV – American Opportunity Tax Credit section
Provide details about the eligible student, including the recognized educational credential, post-secondary education program, and whether the same student has previously received this credit for four tax years.
Step 6: Complete Part V – Tie-breaker for more than one person
If more than one person can claim the same qualifying child, include address and relationship information for each household. The IRS uses these responses to apply tiebreaker rules.
Step 7: Attach the form to your tax return
Include Form 8862 with your completed federal income tax return, along with Schedule EIC if you claim earned income credit or other applicable attachments required by the IRS.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Missing Form 8862 after previous disallowance: Failing to include the form leads to rejection of certain credits. Always attach it if your credits were previously disallowed for more than a clerical error.
- Incorrect or invalid Social Security Numbers: Submitting wrong numbers for qualifying children delays processing. Verify every valid Social Security Number before filing the income tax return.
- Filing during a ban period: Filing while under a two-year or ten-year restriction causes automatic denial. Review your IRS notice carefully before submitting a claim to ensure you are eligible.
- Incomplete Part III child tax credit information: Leaving out dependent details or age information results in errors. Review each qualifying child entry carefully before submitting the completed form.
- Incorrect earned income figures: Entering incorrect earned income may reduce or eliminate your income credit. Confirm wages, self-employment earnings, and withheld income tax totals.
- Not attaching required schedules: Forgetting to attach Schedule EIC or education forms can cause delays. Include all supporting schedules, especially when you claim certain refundable credits or qualified expenses.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
Once the Internal Revenue Service receives your income tax return with Form 8862, it reviews your eligibility for each refundable tax credit. The IRS may request documentation to prove that your qualifying child or eligible student meets all requirements. Refunds involving earned income credit or additional child tax credit are not issued before February 15 due to verification laws.
If your claim is approved, you may receive notice CP74 confirming recertification. If denied again, you can appeal the final determination or submit a new claim after meeting all qualifications in a future tax year.
FAQs
How do I file Form 8862 for the Earned Income Credit?
To claim earned income credit after disallowance, complete Form 8862 and attach Schedule EIC with your income tax return showing each qualifying child’s information.
Can more than one person claim the same qualifying child?
No, more than one person cannot claim the same qualifying child. The IRS applies tiebreaker rules, giving priority to parents or those with higher earned income.
What is required in Part III for the child tax credit CTC?
Part III child tax credit CTC requires listing each dependent’s full name, age, relationship, and proof that they lived with you for more than half of the year.
When can I reapply for certain credits after a denial?
You can claim certain credits again once your ban period ends, and you can show that your circumstances have changed since the previous tax year.
Does reckless or intentional disregard affect future eligibility?
Yes, reckless or intentional disregard of the rules results in a two-year ban. Fraud or a federal or state felony causes a ten-year disqualification from refundable credits.
