What Form 8862 Is For
Form 8862 is used when taxpayers want to claim certain credits again after the IRS disallowed or previously reduced them for reasons other than mathematical or clerical errors. The form helps taxpayers demonstrate that they now meet all the requirements for the Earned Income Credit, Child Tax Credit, Additional Child Tax Credit, Refundable Child Tax Credit, American Opportunity Tax Credit, and other credits related to qualifying children or dependents. It applies when filing for the 2016 tax year, including late and amended returns, as long as a valid Social Security Number or taxpayer identification number is available by the due date.
When You’d Use Form 8862
Taxpayers use Form 8862 when the IRS disallows certain refundable credits for reasons other than a clerical error, and they now meet all the requirements needed to claim those credits again. The form is required when claiming credits, such as the Earned Income Credit, Child Tax Credit, Additional Child Tax Credit, and American Opportunity Tax Credit, after they have been disallowed. The form is not required if the only reason for disallowance was a math or clerical error or if a final determination involves reckless or intentional disregard, which can trigger waiting periods that prevent filing until they expire.
Key Rules or Details for 2016
- Valid Social Security Number requirement: Everyone listed on the return must have a valid Social Security number by the filing deadline. This confirms identity and eligibility for certain refundable credits.
- Eligibility rules for qualifying children: A qualifying child must meet specific age, residency, and support requirements and live with the taxpayer for more than half of the year. These rules also cover temporary absences.
- Restrictions for filing jointly: Married taxpayers filing jointly must meet all earned income credit requirements. Joint return rules also prevent more than one person from claiming the same child.
- Investment income and earned income limits: When earned or investment income surpasses the yearly limits, it impacts credit eligibility. These thresholds help confirm whether a household qualifies for refundable credits.
- Rules for IRS disallowance notices: If a credit was denied in a prior year, Form 8862 is required unless the denial involved only a math or clerical error. More serious denials include waiting periods before you can claim the credit again.
- Restrictions for taxpayer identification numbers: A taxpayer identification number alone doesn’t qualify someone for certain credits. Some credits require valid Social Security numbers, depending on the credit type.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
Step 1: Determine if you must file
Taxpayers should first review IRS notices to confirm whether certain credits were disallowed due to non-mathematical reasons and to determine if any waiting periods apply. This step ensures the completed form is required.
Step 2: Review eligibility for all credits
This step involves confirming that each qualifying child or dependent meets the requirements for the relationship, residency, and support rules for the tax year. It helps ensure the return meets all the requirements before filing.
Step 3: Complete Part I: Initial information
Taxpayers answer questions in Part I and identify the tax year, including whether the IRS previously reduced or disallowed certain credits. This step helps the IRS understand why the form is being filed.
Step 4: Complete Parts II, III, and IV: Credit-specific sections
These parts provide the necessary information for the Earned Income Credit, Child Tax Credit, Additional Child Tax Credit, and American Opportunity Tax Credit. Completing each part accurately allows the IRS to evaluate the claim.
Step 5: Attach Form 8862 and file with your tax return
The completed form must be included with the tax return, and taxpayers filing it must confirm that all information matches. This step ensures the IRS receives all documents together.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Filing after math or clerical errors: Some taxpayers file the form even though their credit was only adjusted due to a mathematical or clerical error, which creates unnecessary delays. You can avoid this by checking whether the notice mentions clerical errors or math issues.
- Missing a valid Social Security Number: Filing without a valid Social Security Number for every child listed makes certain credits unavailable. You can prevent this by verifying each Social Security Number before submitting the return.
- Not meeting residency rules: Some taxpayers claim a qualifying child without showing the child lived with them for more than half the year. You can avoid this by keeping documents showing residency and temporary absences.
- Claiming credits before a waiting period ends: Taxpayers sometimes file before the IRS waiting period for reckless or intentional disregard of the law ends. You can prevent delayed processing by confirming the final determination dates.
- Incomplete credit-specific sections: Missing fields in Part II, Part III, or Part IV affect eligibility for certain credits. You can avoid this by reviewing each completed form and ensuring every section is fully answered.
- Incorrect information when more than one person claims a child: Some returns list a child claimed by more than one person, resulting in a disallowed claim. You can avoid this by confirming who meets all the requirements to claim earned income credit or other credits.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
After filing, the IRS reviews the completed form with the tax return to confirm eligibility for the earned income credit, child tax credit, additional child tax credit, and other credits. The IRS may request documents showing a qualifying child lived with the taxpayer for more than half the year. Processing can take longer for returns claiming certain refundable credits, especially when the IRS verifies qualifying children, resident alien status, or estimated tax paid amounts. Refund timing varies when taxpayers claim the Earned Income Credit or the Refundable Child Tax Credit.
FAQs
How does Form 8862 2016 work for earned income credit claims?
Form 8862 2016 helps taxpayers reclaim the earned income credit after the IRS disallowed it for reasons other than a math or clerical error.
What rules apply when reclaiming the child tax credit after disallowance?
The child tax credit requires meeting residency and age rules, and Form 8862 helps confirm that the taxpayer now meets all the requirements.
How does the IRS review claims for the additional child tax credit using Form 8862?
The additional child tax credit requires a qualifying child and proper Social Security documentation, which the IRS checks through the completed form.
Do American Opportunity Tax Credit claims require Form 8862?
Taxpayers use the form to reclaim the American Opportunity Tax Credit when prior claims involving an eligible student were disallowed.
How do taxpayers claim the earned income credit again after disallowance?
Taxpayers use the form to claim the earned income credit again once they meet the qualifying child and income tests.