CP74 Notice: How to Respond and What It Means
Summary:
The IRS CP74 notice confirms that your Form 8862, filed to claim certain refundable credits after a prior disallowance, has been successfully reviewed, and you are now eligible for those credits. Credits like the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), and American Opportunity Tax Credit (AOTC) may now be applied to your tax return, which can result in a refund. The notice also provides an estimated timeframe for when to expect your refund and steps to take if it doesn’t arrive on time.
Receiving an IRS notice can be unsettling, but in the case of a CP74, it’s generally good news. This notice informs you that after submitting Form 8862, the IRS has confirmed your eligibility for certain refundable credits that were previously disallowed. Whether it’s the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), or American Opportunity Tax Credit (AOTC), this notice lets you know you can now receive these credits. In this article, we’ll cover everything you need to know about the CP74 notice, why you received it, and what to expect going forward.
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What is the CP74 notice?
The CP74 is a formal notice sent by the IRS after reviewing Form 8862, which you are required to submit when you’ve been previously denied certain credits due to an audit or disallowance. This notice confirms that your eligibility has been restored and that the IRS will process your tax return with the credits you claimed.
Why you received the CP74 notice
If you previously claimed refundable credits such as the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), or American Opportunity Tax Credit (AOTC) but were denied them due to an audit or mistake, the IRS requires you to file Form 8862 in the following tax year. This form provides the IRS with additional information to prove your eligibility for these credits. The CP74 is a confirmation that your Form 8862 was accepted, and your credits have been restored.
Pro Tip
Set up IRS account alerts online to get real-time notifications on any changes to your tax return or account. This helps you stay updated on adjustments and due dates.
Credits covered by the CP74 notice
The CP74 notice specifically applies to the following refundable credits:
- Earned Income Tax Credit (EITC) – This credit helps lower-income working individuals and families reduce the amount of tax they owe and can result in a refund.
- Child Tax Credit (CTC) or Additional Child Tax Credit (ACTC) – Credits for taxpayers with qualifying dependents, potentially increasing refunds for families.
- American Opportunity Tax Credit (AOTC) – A credit designed to assist students or parents of students with the cost of higher education, which may be partially refundable.
- Credit for Other Dependents (ODC) – A nonrefundable credit for taxpayers with dependents who do not qualify for the Child Tax Credit.
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What to do when you receive the CP74 notice
While receiving the CP74 notice is generally positive, there are a few steps you should take to ensure everything proceeds smoothly:
Review the details
Although the CP74 confirms your eligibility for credits, it’s crucial to carefully review the notice to ensure all the information is accurate. Confirm the tax year, the credits applied, and any refund details. If anything looks incorrect, contact the IRS using the phone number on the notice.
Expect your refund
If you don’t owe any other taxes or debts, such as back taxes or child support, you can expect your refund within six weeks of receiving the CP74. However, if you do owe other debts, the IRS may offset your refund to cover them.
Keep a copy for your records
Make sure to save the CP74 notice for your records, particularly if these credits were previously disallowed. This documentation could prove useful in the future, should any issues arise with your refund or eligibility for these credits.
Pro Tip
Always e-file your taxes to avoid common filing errors and ensure quicker processing of your tax return, especially if claiming refundable credits.
What if you don’t receive your refund within six weeks?
Delays can sometimes occur, even if your CP74 notice says you should receive your refund within six weeks. Here’s what to do if your refund doesn’t arrive on time:
Contact the IRS
If six weeks have passed and you haven’t received your refund, call the IRS using the toll-free number provided in the top right corner of your CP74 notice. The delay may be due to additional processing or an offset if you owe debts such as federal student loans or unpaid child support.
Check for refund offsets
Sometimes, taxpayers may not receive the full amount of their expected refund if they have outstanding debts. In such cases, the IRS can offset your refund to cover these obligations, and you will receive a notice explaining why the refund was reduced.
Verify your filing status and credits
Errors in your filing status, incorrect information about your dependents, or mismatches in reported income could delay your refund. Double-check your tax return and credits to ensure all the details match IRS records.
Pro Tip
Keep detailed records of all tax forms and notices like the CP74 in case you need to reference them in future audits or credit disputes.
How to avoid future issues with refundable credits
To minimize the risk of delays or issues with your refundable credits, take these proactive steps when filing your taxes next year:
File electronically
Filing your tax return electronically helps reduce errors and speeds up processing. When you e-file, tax software can automatically check your return for errors and even suggest credits and deductions you may qualify for. This reduces the chance of disallowed credits or other issues that could delay your refund.
Ensure accuracy in your tax return
Even small mistakes on your tax return can lead to delays in processing, especially if you’re claiming refundable credits. Double-check your income, filing status, and dependent information before submitting your return. Many tax preparation services offer tools to help verify your information and ensure it’s correct before you file.
Utilize IRS tools and publications
The IRS provides numerous resources to help taxpayers avoid mistakes when claiming credits:
- Interactive Tax Assistant: This tool can help answer questions about eligibility for credits and deductions.
- Publication 596: This publication covers eligibility rules for the Earned Income Tax Credit (EITC).
- Publication 972: A guide to claiming the Child Tax Credit and Credit for Other Dependents.
- Publication 970: Provides information on the American Opportunity Tax Credit and other education-related tax benefits.
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Frequently asked questions
What is Form 8862, and why do I need to file it?
Form 8862, “Information to Claim Certain Refundable Credits After Disallowance,” is required by the IRS if your claim for certain refundable tax credits, such as the Earned Income Tax Credit (EITC) or Child Tax Credit (CTC), was previously denied. Filing this form provides the IRS with additional information about your eligibility for these credits in the future. If the IRS approves your Form 8862, you will be allowed to claim the credits again, as confirmed by receiving the CP74 notice.
What happens if I make a mistake on my Form 8862?
If you make an error on your Form 8862, it could delay the processing of your tax return or result in the denial of your credit claims again. The IRS may send you additional notices requesting more information or corrections. To avoid this, double-check your form before submitting it. If you’re unsure, you may want to consult a tax professional to ensure accuracy.
Will the CP74 notice affect future tax returns?
The CP74 notice itself does not directly affect future tax returns, but it confirms that your eligibility for credits like the EITC, CTC, or AOTC has been restored for the tax year in question. If you continue to meet the eligibility criteria for these credits in future years, you can claim them on future tax returns without needing to file Form 8862 again, unless the credits are disallowed again.
Can the IRS deny my credits again after I receive the CP74 notice?
Yes, receiving the CP74 notice means your eligibility for credits has been restored for that specific tax year, but the IRS can still deny your credits in future years if you no longer meet the eligibility requirements. For example, if your income increases or your filing status changes, you may no longer qualify for the Earned Income Tax Credit or other refundable credits. Always ensure that your tax information is accurate and up to date.
How do I know if my refund will be offset to pay other debts?
If you owe certain debts, such as federal student loans, unpaid child support, or back taxes, the IRS may offset (reduce) your refund to cover these obligations. You will receive a separate notice from the IRS explaining the offset and the amount applied to your debt. If you do not owe any debts, your refund should be issued in full within the timeframe specified in the CP74 notice.
Need help understanding other IRS letters and notices? Visit our comprehensive guide to IRS Letters and Notices or search for the document you received in the table below.
| CP01 | The IRS verified your claim of identity theft and will monitor your account. |
| CP01H | The IRS received a tax return with a social security number that belongs to a dead person. |
| CP02H | Money is due on an amended return based on a grant received due to Hurricane Katrina, Rita, or Wilma. |
| CP03C | You received the First-Time Homebuyer Credit for a house you purchased. |
| CP04 | You may be eligible for tax deferment because either you or a spouse served in a combat zone, a qualified contingency operation, or a hazardous duty station during the tax year specified on your notice. |
| CP08 | You may be entitled to additional money due to the Additional Child Tax Credit. |
| CP10 | Your tax return changed due to a miscalculation, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP10A | Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP11 | You owe money because the IRS amended your return due to a miscalculation. |
| CP11A | Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment also changed. |
| CP11M | Your tax return changed due to a miscalculation of the Making Work Pay and Government Retiree Credit, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP12 | You are due a bigger refund because the IRS corrected one or more mistakes on your tax return. |
| CP12A | The IRS made changes to correct the Earned Income Credit (EIC) claimed on your tax return. |
| CP12E or CP12F | The IRS corrected a miscalculation on your return. |
| CP12M | The IRS made changes to the computation of the Making Work Pay and/or Government Retiree Credits on your return. |
| CP12R | The IRS made changes to the computation of the Rebate Recovery Credit on your return. |
| CP13 | The IRS made changes to your return due to a miscalculation. There is no refund or amount due. Your balance is zero. |
| CP13A | The IRS made changes to your return due to a miscalculation of the Earned Income Credit. There is no refund or amount due. Your balance is zero. |
| CP13M | The IRS made changes to your return due to a miscalculation of the Making Work Pay credit or the Government Retiree Credit. There is no refund or amount due. Your balance is zero. |
| CP13R | The IRS made changes to your return due to a miscalculation of the Recovery Rebate Credit. There is no refund or amount due. Your balance is zero. |
| CP14 | You owe money on unpaid taxes. |
| CP16 | The IRS made changes to your return due to a miscalculation. The refund you were due was applied to other tax debts. |
| CP21A | You owe money due to the changes you requested that the IRS make on your tax returns. |
| CP21B | You are due a refund due to the changes you requested that the IRS make on your tax returns. The money should arrive within 2 to 3 weeks. |
| CP21C | The IRS made the requested changes to your tax return. You will not receive a refund, and there is no tax due. Your balance is zero. |
| CP21E | As a result of your recent audit, the IRS made changes to your tax return, and you owe money as a result of those changes. |
| CP21I | The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes. |
| CP22A | The IRS made the changes you requested, and you owe money as a result. |
| CP22E | As a result of your recent audit, the IRS changed your tax return, and you now owe money. |
| CP22I | The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes. |
| CP23 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You owe taxes due to these changes. |
| CP24 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes. |
| CP24E | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes. |
| CP25 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You are not due a refund, nor do you owe any money. Your balance is zero. |
| CP31 | You need to update your address because your refund check was returned to the IRS. |
| CP45 | The IRS was unable to apply your overpayment to your estimated tax as you requested. |
| CP49 | The IRS used all or part of your refund to pay a tax debt. |
| CP53 | Your refund check will be sent by mail because the IRS can’t provide your refund through direct deposit. |
| CP57 | The bank declined your payment, so the IRS was unable to draft funds from your bank account. |
| CP71 | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71A | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71C | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71D | A reminder of the amount you owe in tax, penalty, and interest. |
| CP88 | The IRS is holding your refund because you haven't filed one or more tax returns, and it believes you will owe tax. |
| CP90 | The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy in a Collection Due Process hearing. |
| CP91 | The IRS will levy up to 15% of your social security benefits for unpaid taxes. |
| CP120 | The IRS needs documentation of your tax-exempt status. |
| CP120A | Your organization’s tax-exempt status has been revoked because it failed to file a Form 990 series return for three consecutive years. |
| CP130 | You may no longer need to pay the Alternative Minimum Tax (AMT) because your tax return filing requirements changed. |
| CP152 | The IRS received your return. |
| CP153 | The IRS will send your refund by mail because your direct deposit did not go through. |
| CP161 | You have an unpaid balance due to the IRS. |
| CP166 | Your monthly payment to the IRS did not go through due to insufficient funds in your bank account. |
| CP178 | You may no longer owe excise tax because your tax return filing requirements changed. |
| CP231 | You need to update your address because your refund was returned to the IRS. |
| CP259 | You did not file the business tax return identified in the notice. |
| CP259A | You should have filed these forms but did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax, or Form 990-N (e-Postcard). |
| CP259B | The IRS requires you to file these forms but did not – Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation. |
| CP259C | The IRS believes that you are a private foundation, but did not file the required Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation. |
| CP259D | You must file this form, but you did not – Form 990-T, Exempt Organization Business Income Tax Return. |
| CP259E | You should have filed this form, but you did not – Form 990-N (e-Postcard) or Form 990/990-EZ, Return of Organization Exempt From Income Tax. |
| CP259F | The IRS requires you to file this form but did not – Form 5227, Split-Interest Trust Information Return. |
| CP259G | The IRS requires you to file this form, but you didn’t – Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations. |
| CP259H | As a tax-exempt political organization, you must file this form, but you did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax. |
| CP276A | You submitted your tax liability schedule incorrectly. The IRS typically charges a Federal Tax Deposit (FTD) penalty for this but did not this time. |
| CP276B | The IRS did not receive the correct amount of tax deposits. It normally charges a Federal Tax Deposit (FTD) penalty but did not this time. |
| CP297 | The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing. |
| CP297A | The IRS has levied your assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing. |
| CP298 | The IRS notifying you of its intent to levy up to 15% of your social security benefits for unpaid taxes. |
| CP501 | You have a balance due on one of your tax accounts. |
| CP503 | You have an unpaid balance on one of your accounts, and the IRS has not heard from you. |
| CP504 | You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy your state income tax refund to apply it to the amount you owe. |
| CP504B | You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy certain property or rights to property to apply it to the amount you owe. |
| CP521 | A reminder that you have an installment agreement payment due. |
| CP523 | You have defaulted on your payment agreement. Therefore the IRS is terminating the agreement and will levy your assets. |
| CP601 | Usted tiene un saldo pendiente de pago (dinero que le debe al IRS) en una de sus cuentas contributivas. |
| CP603 | No hemos recibido respuesta de parte de usted y todavía tiene un saldo sin pagar en una de sus cuentas contributivas. |
| CP604 | Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará cualquier reembolso de impuestos estatales al que tenga derecho y aplicarlo al pago de su deuda. |
| CP604B | Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará ciertas propiedades o derechos de propiedad y lo aplicará al pago de su deuda. |
| CP621 | Este aviso es para notificarle que usted tiene un plan de pagos a plazos vencido. Por favor, envíe el pago inmediatamente. |
| CP623 | Este aviso es para informarle nuestra intención de cancelar su plan de pagos a plazos y confiscar (embargar) sus bienes. Usted incumplió en su acuerdo. |
| CP711 | Nosotros realizamos cambios a su planilla debido a que entendemos que hubo un cálculo erróneo. Como resultado de estos cambios, usted adeuda dinero por sus contribuciones. |
| CP721 | Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos. |
| CP722 | Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos. |
| CP771 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP772 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP773 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP774 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP959 | Usted no radicó su planilla de contribución de negocios identificada en este aviso. |
| CP2000 | The income or payment information on file doesn’t match your tax return. The discrepancy may result in an increase or decrease in your tax due. |
| CP3219A | The IRS has received information that is different from what you reported on your tax return. This may result in an increase or decrease in your tax. |
| CP3219N | The IRS didn’t receive your tax return, so it calculated your return based on the information received from employers, financial institutions, and others. If you want to challenge the proposed tax, you have 90 days from the date of this notice. If you are outside the country, you have 150 days. |
| Letter 0012C | The IRS needs additional information to process your tax return. |
| Letter 0484C | The IRS wants a completed |
| Letter 0525 | Updates you on proposed changes after an IRS examination. Any changes are explained and details the refund due or taxes owed. |
| Letter 531 | IRS Notice of Deficiency. The information the IRS received about you was different from what you reported on your return. |
| Letter 0668D(LP 68) | The IRS released their levy. |
| Letter 0549C | Your tax bill was paid. |
| Letter 0681C | The IRS accepted your payment proposal. However, this is not a formal Installment Agreement. |
| Letter 0757C | You did not adhere to the terms of your Installment Agreement. |
| Letter LT 11 | The IRS plans to seize your property or rights to property. |
| Letter 1058 | The IRS has not received your payment. It plans to seize your property or rights to property. |
| Letter 1615 (LT 18) | You must respond to the IRS within 10 days of this notice regarding past due tax returns. |
| Letter 1737 (LT 27) | Complete and sign Form 433F, Collection Information Statement. |
| Letter 1961C | Your application for a Direct Debit Installment Agreement was declined. It explains why and what you need to do to qualify. |
| Letter 1962C | Your application for a |
| Letter 2050 (LT 16) | The IRS is trying to collect unpaid taxes from you from returns that have been filed or from returns that have not been filed. |
| Letter 2257C | The IRS is providing the payoff amount that you requested. |
| Letter 226-J | An IRS letter to large employers notifying them that they may be liable for an Employer Shared Responsibility Payment (ESRP). |
| Letter 2271C | A request for an Installment Agreement has been approved. It explains the fees and how to qualify for a Low Income Fee Reduction. The letter may also request missing information. |
| Letter 2272C | An IRS letter explaining why your request to pay the balance due in installments was declined. |
| Letter 2273C | A confirmation letter of your request to pay the balance due in installments. It contained the amount to pay, fees charged, and where to send payment. Instructions on how to apply for the Low Income Fee Reduction included. |
| Letter 2318C | A response to a request to pay taxes due to payroll deductions. It also explains the fees that are charged. |
| Letter 2357C | The IRS is admitting that it did not send you the balance due notices that it should have. |
| Letter 2603C | The IRS accepted your installment agreement. The IRS will file a Notice of Federal Tax Lien on your personal property. |
| Letter 2604C | The IRS has accepted your request for installment payments. This IRS letter provides the monthly payment, the address where to send it, and the fees charged. The letter also provides instructions on how to apply for the Low Income Fee Reduction. |
| Letter 2761C | The IRS is requesting your combat zone service dates to ensure that it provides you with the special provisions and protection of the combat zone deferment. Copies of military orders or other documentation to support your time served may be requested. Civilians working in support of the Armed Forces may be required to provide a Letter of Authorization or a letter from their employer. |
| Letter 2789C | An annual reminder notice, as required by law, of the balance due to the IRS. It explains that penalties and interest continue to accrue until the balance is fully paid. |
| Letter 2840C | Confirms your Installment Agreement request and includes the payment amount and due date. This IRS letter explains the fees charged for paying monthly and explains how to apply for the Low Income Fee Reduction (if you qualify). |
| Letter 3030C | Provides an explanation of the tax, penalty, and interest still due on your account. |
| Letter 3127C | A confirmation of your request to make a change to your Installment Agreement. This IRS letter explains the fees for the change. Changes can be to the payment amount or due date, or it can include additional liabilities. |
| Letter 3174 | A reminder of taxes due after the IRS has sent a Notice of Intent to Levy. |
| Letter 3217C | The IRS has accepted your request to pay the balance in installments. This IRS letter provides your payment amount, the due date, and fees charged. The letter also provides instructions on applying for the Low Income Fee Reduction (if you qualify). |
| Letter 3228 (LT 39) | A request to pay the balance due within 10 days using the envelope provided. |
| Letter 3500 | The IRS has received your documents, and it needs additional time to review them. |
| Letter 3572 | Your Federal Income Tax Return has been selected for examination. The IRS auditor requests that you call to schedule an audit appointment. |
| Letter 4883C | The IRS received your federal income tax return but needs more information to verify your identity in order to process your tax return accurately. |
| Letter 4903 (LT 26) | You must file your tax returns immediately. The IRS has previously contacted you, but it did not receive a response. |
| Letter LP 47 | The IRS is trying to locate the person identified in the letter and is requesting that you provide their new address. |
| Letter LP 59 | The IRS has not received a response to the notice of levy it previously sent. |
| Audit Letter 2205 | The IRS manages audits either by mail or through an in-person interview to review your records. The interview may be at an IRS office (office audit) or the taxpayer’s home, place of business, or accountant’s office (field audit). |
| Letter 915 | You recently underwent an audit, and the IRS informs you that you now owe taxes. |
Key takeaways
- The CP74 notice confirms the acceptance of your Form 8862 and restores eligibility for certain refundable credits.
- You can expect your refund within six weeks if no other debts or taxes are owed.
- Keep a copy of the CP74 notice for your records, as it could be important for future tax years.
- If you do not receive your refund in six weeks, contact the IRS for further guidance.
- Filing your taxes electronically can help avoid mistakes and reduce delays in receiving your refund.
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