What Form 8862 Is For
Form 8862 is an IRS form used when certain credits, such as the Earned Income Credit, Child Tax Credit, and American Opportunity Tax Credit, have been previously disallowed. Taxpayers file it to show they now meet all the requirements for these tax credits. It applies when a credit is denied for reasons apart from a math or clerical error, and it helps the IRS confirm the credit’s eligibility requirements for the most recent tax year.
When You’d Use Form 8862
You use this tax form when a credit is previously reduced or formerly disallowed for reasons other than clerical errors, including reckless or intentional disregard. It also applies when filing jointly or a joint return from a prior year. Form 8862 is required before claiming certain credits again on a late or amended tax return, as long as you are not under a final determination involving fraud.
Key Rules or Details for 2021
- Eligibility rules: You file this when certain refundable credits are denied, and you must demonstrate that all requirements are met by completing a form and applicable schedules on your tax return. You must include Schedule EIC if necessary.
- Social Security requirements: A valid Social Security Number is required for the earned income credit, and a valid SSN for qualifying children must be issued by the due date of the return.
- Qualifying child rules: A qualifying child must live with you for more than half the tax year, meet age rules, and not provide more than half of their support.
- Residency rules: A resident alien can claim refundable credits if all conditions are met, including guidelines for temporary absences and children who are kidnapped, as per IRS guidance.
- Income limits: Investment income limits apply for the earned income tax credit, and you must track earned income and withheld income tax to confirm eligibility.
- Child-related credits: You must follow rules for the child tax credit, refundable child tax credit, additional child tax credit, and other dependents using proper identification, such as a taxpayer identification number.
- Education credits: The American Opportunity Tax Credit and Hope Scholarship Credit require an eligible student enrolled in post-secondary education for part of the year.
- Supporting paperwork: You must attach all applicable schedules, including Parts III and IV of the form, when those sections apply to your situation.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
Step 1: Determine if Form 8862 is required
Review whether the credit was previously disallowed for any reason other than a math or clerical error, and confirm you meet all the requirements for claiming it again.
Step 2: Gather eligibility documents
Collect proof showing a qualifying child meets residency tests, age tests, and support tests, along with income credit information, eligible student documents, and records for other credits.
Step 3: Complete the required sections
Fill out the completed form based on the credit’s eligibility requirements, ensuring that the correct parts, such as Part II or Part IV, are completed for the credits you claim.
Step 4: Attach applicable schedules
Include the EIC schedule and other applicable schedules to support qualifying children, refundable credits, or education-related credits, ensuring documents match the most recent tax year.
Step 5: Submit your tax return
Attach the completed IRS form to your tax return for the current or prior year, and file electronically or by mail, depending on your situation and software support.
Step 6: Keep records for review
Save documents showing earned income, estimated tax paid, withheld income tax, and proof of qualifying children or eligible student status, should the IRS request an additional statement.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Missing SSN requirements: Some filers use an incorrect taxpayer identification number. You can avoid issues by confirming each qualifying child has a valid SSN issued before the due date.
- Ignoring ban periods: Some taxpayers file after reckless or intentional disregard of findings. You can prevent delays by verifying whether a final determination restricts you from claiming certain credits.
- Incorrect qualifying child rules: Some returns list a child who does not meet residency or age rules. You can avoid denials by verifying that qualifying children reside with you for at least half the year.
- Missing schedules: Some filers forget to attach Schedule EIC or other relevant schedules. You can prevent problems by verifying that all supporting documents are included before submitting your tax return.
- Using wrong credit rules: Some claimants confuse the only reason a credit was denied. You can avoid errors by reviewing prior-year IRS notices that outline previously reduced or disallowed credits.
- Incorrect income documentation: Some returns include incomplete records of earned income. You can prevent issues by matching earned income details to employer statements and checking estimated tax paid amounts.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
The IRS reviews your tax form and checks whether you now meet the eligibility requirements for certain credits. Your claimed refund may take longer while the IRS verifies identification information, such as Social Security Number details or taxpayer identification number information. Extra documentation might be required if either you or listed dependents need verification, especially when more than one person claims the same qualifying child.
FAQs
Do I need to file Form 8862 to claim certain credits after they are disallowed?
Yes, you need this form when certain credits are denied for reasons other than a math or clerical error, and you want to claim them again.
How does the child tax credit work when filing Form 8862?
This credit requires a qualifying child with a valid SSN. You must demonstrate that the child meets the residency, age, and support requirements before the IRS will allow the claim.
When can I claim the earned income credit after it has been disallowed?
You can reclaim it once you meet all rules and are not under a ban for reckless or intentional disregard. Form 8862 confirms eligibility to the IRS.
Do I use Form 8862 for the additional child tax credit?
Yes, this form applies if you are claiming the additional child tax credit after it was previously disallowed and you now meet the eligibility rules.
Does Form 8862 apply to the American Opportunity Tax Credit?
Yes, you use it when this education credit is denied, and you want to show that an eligible student meets all post-secondary education requirements.
What if more than one person tries to claim certain credits after disallowance?
The IRS decides who may claim certain credits after disallowance, and you must show your qualifying child meets residency rules and related criteria.
Can I claim a credit for other dependents by using the information from Form 8862?
Yes, as long as other dependents meet identification rules and you complete the correct sections of the form before adding them to your tax return.
