Form 8862: Information To Claim Certain Credits After Disallowance (2021)

When the IRS denies certain valuable tax credits, it doesn't necessarily mean you can never claim them again. Form 8862 is your ticket back—a special recertification form that allows you to prove you now meet all the eligibility requirements and deserve another chance at claiming credits that can put hundreds or even thousands of dollars back in your pocket.

What Form 8862 Is For

Form 8862, officially titled "Information To Claim Certain Credits After Disallowance," is a recertification form required by the IRS when you want to claim specific tax credits after they've been previously denied or reduced on an earlier tax return. Think of it as a second-chance application that demonstrates to the IRS that you now qualify for credits you couldn't properly claim before.

This form applies to four major tax credits that provide substantial financial relief to working families and students. First, there's the Earned Income Credit (EIC), which helps low-to-moderate income workers and families. Second, the Child Tax Credit (CTC), Refundable Child Tax Credit (RCTC), Additional Child Tax Credit (ACTC), and Credit for Other Dependents (ODC)—these credits provide financial support for families raising children and caring for dependents. Finally, the American Opportunity Tax Credit (AOTC) helps offset higher education costs for students in their first four years of college.

The IRS requires Form 8862 because these credits involve substantial amounts of money and have detailed eligibility rules. When credits are disallowed (except for simple math errors), the IRS wants to see that you understand the requirements and can properly document your eligibility before allowing you to claim them again. According to the IRS instructions for Form 8862, you must complete this form and attach it to your tax return when both of these conditions apply: your credit was previously reduced or disallowed for any reason other than a math or clerical error, and you now meet all requirements for the credit and want to claim it.

When You’d Use Form 8862

You'll need Form 8862 in several specific situations. The most common scenario is when filing your regular annual tax return for the year after a credit was denied. For example, if your 2020 Earned Income Credit was disallowed during an audit, you must attach Form 8862 when filing your 2021 return if you want to claim the EIC again.

The form is also required when filing an amended return using Form 1040-X if you're correcting an earlier return to add one of these credits that was previously disallowed. However, timing matters—you cannot use Form 8862 during certain ban periods that the IRS imposes for serious violations.

There are important exceptions when you don't need to file Form 8862, even after a previous disallowance. You can skip the form if: (1) After your credit was reduced or disallowed, you previously filed Form 8862 and the credit was then allowed, and it hasn't been disallowed again except for math errors; or (2) You're claiming the EIC without a qualifying child and the only reason it was denied before was because a child you listed didn't qualify as your child (as opposed to other eligibility issues).

The most serious exceptions involve mandatory ban periods. According to the IRS, you cannot file Form 8862 or claim these credits for 2 years after a final determination that your claim was due to "reckless or intentional disregard of the rules," or for 10 years after a final determination that your claim was due to fraud. During these ban periods, the credits are completely off-limits regardless of your current eligibility.

Key Rules for 2021

The 2021 tax year brought several important changes, particularly for the Earned Income Credit. For EIC filers without a qualifying child, the age requirements were significantly modified. The minimum age dropped from 25 to 19 for most filers, though specified students (except qualified former foster youth or homeless youth) must still be at least 24. Qualified former foster youth and qualified homeless youth can claim the credit as young as age 18. Perhaps most notably, the maximum age requirement was eliminated entirely for 2021—taxpayers over 65 could now claim the EIC without a qualifying child.

For EIC filers with a qualifying child, even if your child hadn't been issued a valid Social Security Number (SSN) by your return's due date, you could still follow the rules for filers with qualifying children when determining eligibility. However, when calculating your actual EIC amount, you had to use the rules for taxpayers without a qualifying child—resulting in a smaller credit amount.

Separated spouses received more flexible treatment in 2021. If you were married but filing separately and had a qualifying child, you could potentially claim the EIC if you lived with your child for more than half the year and either maintained separate residences from your spouse for the last six months of 2021 or were legally separated.

Regarding Social Security Number requirements, strict rules applied. For the EIC, both you and any qualifying children needed valid SSNs issued by the return's due date (including extensions). For the CTC/RCTC/ACTC, children needed SSNs valid for employment—those with only Individual Taxpayer Identification Numbers (ITINs) or Adoption Taxpayer Identification Numbers (ATINs) didn't qualify. However, dependents claimed for the Credit for Other Dependents could use SSNs, ITINs, or ATINs.

The Child Tax Credit for 2021 had special provisions. The credit applied to qualifying children under age 18 (not the usual 17). Additionally, if you met certain residency requirements, your entire child tax credit became fully refundable—a significant enhancement for that year.

Step-by-Step (High Level)

The Form 8862 filing process is straightforward but requires careful attention to detail. Here's how to navigate it successfully:

Step 1: Determine if Form 8862 is Required – Check whether your situation actually requires this form by reviewing the criteria above. Remember that simple math errors don't trigger the Form 8862 requirement, and you should check whether you're in a ban period.

Step 2: Gather Documentation – Before starting the form, collect proof that you now meet all eligibility requirements for the credit(s) you're claiming. For qualifying children, this includes school records, medical records, and other documents showing the child lived with you. For education credits, gather enrollment verification and expense receipts. For earned income, compile employment records and income documentation.

Step 3: Complete Form 8862 – The form has five parts. Part I asks which year you're claiming credits for and which credits you're seeking. Parts II through IV are credit-specific—you only complete the sections for credits you're claiming. Part II covers the Earned Income Credit (with separate sections for filers with and without qualifying children). Part III addresses the Child Tax Credit and related credits. Part IV handles the American Opportunity Tax Credit. Part V addresses situations where a child could qualify for multiple taxpayers.

Step 4: Complete Related Forms and Schedules – Form 8862 doesn't stand alone. If claiming the EIC with a qualifying child, you must also complete Schedule EIC. For child tax credits, attach Schedule 8812. For the American Opportunity Credit, include Form 8863. These supporting documents are mandatory.

Step 5: Attach to Your Tax Return – Form 8862 must be physically attached to your Form 1040 or 1040-SR. You cannot e-file during a ban period—you must file a paper return.

Step 6: Maintain Records – Keep copies of Form 8862, all supporting documentation, and proof that demonstrates your eligibility. The IRS may request additional information before processing your claim.

Common Mistakes and How to Avoid Them

Many taxpayers encounter problems with Form 8862 due to preventable errors. Here are the most common pitfalls and strategies to avoid them:

Mistake #1: Filing During a Ban Period – Some taxpayers don't realize they're prohibited from claiming credits during 2-year or 10-year ban periods. Before filing, review any previous IRS correspondence about your credit denial. If fraud or reckless disregard was determined, check the ban end date. Filing during a ban wastes time and triggers automatic denial.

Mistake #2: Claiming Children Who Don't Meet All Four Tests – This is the single most common error with qualifying children. A qualifying child must meet all four tests: relationship (son, daughter, sibling, or descendant), age (under 19, or under 24 if a full-time student, or any age if permanently disabled), residency (lived with you more than half the year in the United States), and support (didn't provide more than half their own support). Missing even one test disqualifies the child. Carefully review each test before claiming a child.

Mistake #3: Missing Social Security Number Deadlines – For 2021, SSNs must have been issued by the return's due date, including extensions. Many taxpayers incorrectly believe they can claim credits and provide SSNs later. They cannot. If SSNs weren't issued in time, you cannot claim certain credits regardless of other eligibility factors.

Mistake #4: Incomplete Documentation – Filing Form 8862 signals to the IRS that your return deserves extra scrutiny. Many taxpayers submit the form without gathering robust documentation proving residency, relationship, and other eligibility factors. Proactively compile school records, medical records, utility bills, and official documents showing children lived with you for more than half the year.

Mistake #5: Forgetting Required Schedules – Form 8862 explicitly requires accompanying schedules (Schedule EIC for earned income credit with qualifying children, Schedule 8812 for child tax credits, Form 8863 for education credits). Submitting Form 8862 without these supporting schedules results in processing delays or outright denial.

Mistake #6: Using ITINs Instead of SSNs for Wrong Credits – While ITINs work for some credits, they don't work for others. For the Earned Income Credit, you must have an SSN—ITINs don't qualify. For the CTC/RCTC/ACTC, children must have SSNs valid for employment, not ITINs. Understanding which identification numbers work for which credits prevents unnecessary denials.

What Happens After You File

Once you submit your tax return with Form 8862 attached, several processes unfold. First, the IRS flags your return for additional review since Form 8862 indicates a previous credit problem. This doesn't mean you've done anything wrong—it simply means the IRS will examine your return more carefully before approving credits.

Processing timelines differ from standard returns. According to IRS guidance, the agency cannot issue refunds before mid-February for returns claiming the Earned Income Credit or Additional Child Tax Credit, regardless of when you file. This delay applies to your entire refund, not just the credit portion. These delayed refund dates allow the IRS to combat fraud and verify eligibility more thoroughly.

Additional documentation requests are common. The IRS may send you a letter requesting proof of eligibility—school records, birth certificates, lease agreements, medical records, or other documents demonstrating that qualifying children lived with you and meet all requirements. Respond promptly with clear, legible copies of requested documents.

If the IRS approves your credit, you'll receive your refund including the credit amount (subject to the timing delays mentioned above). This approval means you're back in good standing for future credit claims. If you continue meeting eligibility requirements in subsequent years, you can claim credits normally without Form 8862—unless they're disallowed again.

If the IRS denies your credit, you'll receive a notice explaining why. You have the right to appeal the decision. The notice will include instructions for requesting an appeal or audit reconsideration if you have additional evidence. Denials may result from insufficient documentation, not meeting eligibility requirements, or errors in completing the form.

Future year implications are significant. If your credit is allowed after filing Form 8862, you don't need to file the form again in future years—provided your credits aren't denied again for reasons other than math errors. However, a new disallowance restarts the Form 8862 requirement cycle. Additionally, if the IRS determines your claim involved fraud or reckless disregard, you may face a new ban period preventing future credit claims.

FAQs

1. Do I need Form 8862 if my credit was denied due to a math error on my return?
No. Form 8862 is only required when credits were reduced or disallowed for reasons other than math or clerical errors. Simple calculation mistakes don't trigger the Form 8862 requirement.

2. Can I e-file my tax return if I need to attach Form 8862?
Generally yes, unless you're filing during a ban period. Most tax software supports Form 8862 for electronic filing. However, if you're within a 2-year or 10-year ban period, you must file a paper return, and your credit will still be denied.

3. What's the difference between a 2-year ban and a 10-year ban?
A 2-year ban results from "reckless or intentional disregard of the rules"—serious negligence in claiming credits. A 10-year ban results from fraud—deliberately falsifying information to claim credits you knew you weren't entitled to receive.

4. I filed Form 8862 last year and my credit was allowed. Do I need to file it again this year?
No. Once your credit is allowed after filing Form 8862, you don't need to file it in subsequent years as long as your credits aren't disallowed again (except for math errors).

5. Can I claim the Earned Income Credit without a qualifying child after it was previously denied?
Yes, but only if the previous denial wasn't due to fraud or reckless disregard and you're not in a ban period. Additionally, if your EIC was denied only because a child you claimed wasn't your qualifying child (but you were otherwise eligible), you can claim the EIC without a qualifying child in future years without filing Form 8862.

6. What documents should I keep in case the IRS requests more information?
Maintain school records, medical records, birth certificates, Social Security cards, lease agreements, utility bills, and any documents proving qualifying children lived with you for more than half the year. For education credits, keep enrollment verification, Form 1098-T, and tuition payment receipts.

7. How long does it take to process a return with Form 8862?
Processing times vary, but returns with Form 8862 typically take longer than standard returns due to additional review. Factor in the mid-February earliest refund date for EIC and ACTC claims, plus potential additional time for documentation review.

For More Information

Sources: All information is based on official IRS documentation including Form 8862 Instructions for 2021, About Form 8862, and IRS guidance on credit disallowance.