Form 8862: Information To Claim Certain Credits After Disallowance (2020)

What the Form Is For

Form 8862 is your pathway back to claiming valuable tax credits after the IRS has previously denied them. Think of it as a ""second chance"" form that lets you recertify your eligibility for credits that were taken away.

For the 2020 tax year, Form 8862 applies to four major tax credits: the Earned Income Credit (EIC), Child Tax Credit (CTC)/Additional Child Tax Credit (ACTC)/Credit for Other Dependents (ODC), and the American Opportunity Tax Credit (AOTC). These credits can put hundreds or even thousands of dollars back in your pocket, so losing them is significant.

The form is specifically required when the IRS reduced or disallowed your credit for reasons beyond simple math mistakes. If your credit was denied because you miscalculated numbers on your tax return—what the IRS calls a ""math or clerical error""—you don't need Form 8862. This form is for more substantial issues, such as claiming a child who didn't meet the qualifying rules, incorrect income reporting, or failing to provide adequate documentation.

By completing Form 8862, you're essentially telling the IRS: ""I understand why my credit was denied before, but I now meet all the requirements and want to claim it again."" The form asks detailed questions about your qualifying children, living arrangements, and circumstances to help the IRS verify that you're now eligible.

When You'd Use It (Late/Amended Returns)

You must attach Form 8862 to your regular tax return for the year you're claiming the credit again—not to the return where it was originally denied. For example, if your 2018 credit was disallowed and you want to claim it on your 2020 return, you'd attach Form 8862 to your 2020 return.

The form works with both original returns filed by the deadline and late returns filed after the deadline has passed. If you're filing your 2020 return late (after the April 15, 2021 deadline, or October 15, 2021 if you filed an extension), you still attach Form 8862 if you had a previous credit disallowance.

For amended returns using Form 1040-X, the rules are the same: attach Form 8862 if you're trying to claim a previously disallowed credit on the amended return. The key point is that Form 8862 must accompany the return for the year you're claiming the credit, regardless of whether it's filed on time, late, or as an amendment.

However, there are important exceptions. You don't need to file Form 8862 again if you already filed it once and your credit was then allowed (unless it was disallowed again later for reasons other than math errors). Also, if you're claiming the EIC without a qualifying child and the only issue was that a child you listed wasn't actually your qualifying child, you can still take the EIC without Form 8862.

Key Rules for 2020

The 2020 tax year had several critical rules governing Form 8862 usage. First and foremost: Social Security Number timing matters. You must have your SSN (or Individual Taxpayer Identification Number for some credits) issued on or before the due date of your 2020 return, including extensions. This means by April 15, 2021, or October 15, 2021 if you filed for an extension. Late-issued identification numbers cannot be used retroactively.

For the Earned Income Credit specifically, you need an SSN that's valid for employment—not one marked ""Not Valid for Employment"" or ""Valid for Work Only With DHS Authorization."" Your qualifying children also need valid SSNs issued by the return deadline. If your child has an ITIN or Adoption Taxpayer Identification Number (ATIN) instead of an SSN, they cannot be used as a qualifying child for EIC purposes.

The ban periods are crucial to understand. If the IRS determined your previous credit claim involved ""reckless or intentional disregard of the rules,"" you cannot claim that credit for two years following the tax year of final determination. If your claim was deemed fraudulent, the ban extends to ten years. During these ban periods, you cannot use Form 8862 to reclaim the credit—the door is completely closed.

Another 2020-specific consideration: the PATH Act requires the IRS to hold refunds claiming EIC or ACTC until mid-February. Even with a perfectly filed Form 8862, you won't receive your refund before mid-February if you're claiming these credits. This delay applies to your entire refund, not just the credit portion.

Step-by-Step Filing Process (High Level)

Step 1: Confirm You Need the Form

Check whether you actually need Form 8862 by reviewing any IRS notices you received about your previous credit denial. Look for notices like CP79 or CP79A, which specifically tell you to file Form 8862. If your credit was denied for only a math error, you don't need this form.

Step 2: Gather Your Documentation

Before filling out the form, collect records proving you now qualify: birth certificates, school records, medical records, and any documents showing where you and your qualifying children lived during 2020. The IRS may request these after you file.

Step 3: Complete Part I

Enter 2020 on line 1 (the year you're claiming the credit, not the year it was denied). On line 2, check the boxes for each credit you're claiming: EIC, CTC/ACTC/ODC, and/or AOTC.

Step 4: Fill Out Relevant Sections

Complete only the parts that apply to the credits you checked. Part II is for EIC filers, Part III for CTC/ACTC/ODC claimants, Part IV for AOTC claimants, and Part V applies if a child could be claimed by more than one person (tiebreaker rules).

Step 5: Attach to Your Return

Form 8862 cannot be filed alone; it must be attached to your complete tax return. For e-filing, your tax software will attach it electronically. For paper filing, physically attach it behind your Form 1040 and mail everything together to the correct IRS address for your state.

Step 6: Keep Copies

Retain copies of everything you submit, including Form 8862 and all supporting documentation, for at least three years.

Common Mistakes and How to Avoid Them

Mistake #1: Filing When You Don't Need To
Many taxpayers file Form 8862 unnecessarily, which can raise red flags and delay processing. Don't file it if your credit was denied for a math error, or if you already successfully filed Form 8862 once and haven't had another denial since. Solution: Carefully read any IRS notices to determine if Form 8862 is actually required.

Mistake #2: Confusing the Year
Line 1 asks for the tax year you're claiming the credit (2020 in this case), not the year your credit was disallowed. Putting the wrong year is a common error that causes rejections. Solution: Always enter the current tax year you're filing for, not the past year when you had problems.

Mistake #3: Not Meeting Eligibility Requirements
Some taxpayers file Form 8862 while still not meeting the credit requirements, leading to another denial. This is particularly problematic because repeated disallowances can extend ban periods. Solution: Carefully review all eligibility rules for your credit before claiming it again. Make sure qualifying children meet relationship, age, residency, and support tests.

Mistake #4: Missing Documentation
Filing Form 8862 without gathering proof first means you'll scramble if the IRS requests verification later. Solution: Before filing, collect and organize school records, medical records, lease agreements, and other documents proving residency and relationship for qualifying children.

Mistake #5: Ignoring Ban Periods
Attempting to claim credits during a two-year or ten-year ban period is futile and may trigger penalties. Solution: If you received a notice about reckless disregard or fraud, count the years carefully. You must wait out the entire ban period before filing Form 8862.

Mistake #6: Wrong SSN Type
Using an ITIN where an SSN is required (particularly for EIC) causes automatic rejection. Solution: Verify that you and your dependents have the correct type of taxpayer identification number for the credits you're claiming. Apply for proper identification well before the tax deadline.

What Happens After You File

Once you submit your tax return with Form 8862 attached, the IRS will process it through enhanced review procedures. Form 8862 flags your return for additional scrutiny because you're reclaiming a previously denied credit. This doesn't mean you'll be audited, but expect closer examination than a typical return.

Processing time typically takes up to 21 business days for most returns, though Form 8862 cases may take longer—sometimes 45 to 180 days depending on IRS workload and whether they need additional information. If you're claiming EIC or ACTC, remember that by law your refund cannot be issued before mid-February, regardless of when you file.

The IRS may send you a request for additional documentation (notices like CP75 or CP75A). These letters ask you to prove your eligibility by providing documents showing your qualifying children lived with you, relationship proof, or other evidence. You'll typically have 30 days to respond. It's crucial to respond completely and on time to avoid another denial.

If your claim is approved, you'll receive your refund (or your tax liability will be reduced) according to normal processing schedules. The IRS may also send you a CP74 notice confirming you're recertified for the credit, which means you don't need to file Form 8862 again in future years unless the credit is disallowed again.

If your claim is denied again, you'll receive a notice explaining the reasons and your appeal rights. Another denial may extend ban periods, especially if the IRS determines the second attempt also involved disregard of the rules. You have the right to appeal any determination through the IRS Independent Office of Appeals.

FAQs

1. Do I need to file Form 8862 every year after a disallowance?

No, you only file it once to recertify your eligibility. If approved, you can claim the credit in subsequent years without filing Form 8862 again, unless the credit is disallowed again for reasons other than math errors.

2. Can I e-file my return with Form 8862 attached?

Yes, Form 8862 can be e-filed with your tax return through most major tax software programs. The software should automatically include it if you indicate you need it.

3. What if I'm still within a ban period but my circumstances have changed?

Ban periods cannot be shortened or waived, even if your situation improves. You must wait until the ban period expires. If you believe the ban was imposed in error, you can appeal the original determination that created the ban.

4. How do I prove my child lived with me if I don't have documentation?

Acceptable documents include school records listing your address, medical records, social service records, daycare provider statements, landlord statements, or even letters from community organizations or religious officials who can verify the child's residence.

5. What happens if my return is rejected for not including Form 8862?

You'll receive reject code IND-046-01. Simply attach Form 8862 to your return and resubmit. The rejection doesn't mean anything is wrong beyond the missing form.

6. Can I claim other dependents who have ITINs instead of SSNs?

For the Credit for Other Dependents (ODC), yes—dependents can have SSNs, ITINs, or ATINs. However, for CTC and ACTC, qualifying children must have SSNs valid for employment. For EIC, all qualifying children must have valid SSNs.

7. Will filing Form 8862 automatically trigger an audit?

No, but it does flag your return for enhanced review. The IRS will examine your eligibility more carefully, and you may be asked to provide documentation, but this isn't a formal audit. Most Form 8862 cases are resolved through correspondence, not in-person audits.

Sources: All information derived from official IRS publications including Form 8862 Instructions (2020), About Form 8862, and What to do if we deny your claim for a credit from IRS.gov.