What Is An 8862 Tax Form?

Article Summary:

Form 8862 is a document that the Internal Revenue Service (IRS) requires taxpayers to complete to reclaim certain refundable credits that were previously reduced or disallowed once the situation has been resolved. It must be attached to the taxpayer’s tax return if they wish to receive the credit again in the future—though there are exceptions that exempt some taxpayers from filing the form.

Claiming tax credits can reduce your taxes owed and even result in a larger refund amount. But what happens when the tax credit you claimed on your return was reduced or even denied? Can you reclaim it for the next tax year? You can, but first, you’ll need to file Form 8862.

In this article, we’ll dive deeper into what the purpose of Form 8862 is, who needs to file it, and other important information you need to know.

What is the purpose of Form 8862?

The purpose of Form 8862—Information to Claim Certain Credits After Disallowance—is to allow taxpayers to reclaim tax credits that were reduced or disallowed on their previous tax returns. These tax credits can include the earned income credit (EIC), child tax credit (CTC), credit for other dependents, additional child tax credit (ACTC), or the American opportunity tax credit.

Once this form is complete and submitted to the IRS, taxpayers who were once denied these credits will have a chance to successfully reclaim them.

Form 8862

Will Form 8862 delay my refund?

Typically, filing Form 8862 will not delay the refund process. However, your tax refund could be slightly delayed if you plan to claim earned income credit or the additional child tax credit on your returns. This is because the IRS typically does not issue refunds with these claimed credits before mid-February.

You can usually expect your EIC or ACTC related refunds to be available in your bank account by March 1st if you have chosen direct deposit.

Pro Tip

Waiting for tax returns to arrive can make a lot of taxpayers quite anxious. Follow these steps to access the “Where’s My Refund” tool to help you stay updated on your tax refund status.

Who must file Form 8862?

According to the IRS, if your tax credits—those mentioned above—were reduced or disallowed for any reason other than a math or clerical error, you’ll need to file Form 8862. This is assuming that you now meet the requirements and want to claim the credits.

The IRS also specifies that you’ll need to file Form 8862 if your:

  • EIC claim for a tax year after 1996 was denied or reduced (excluding math or clerical error)
  • CTC, ACTC, ODC, or AOTC for a tax year after 2015 was denied or reduced (excluding math or clerical error)

Who doesn’t need to file Form 8862?

You won’t need to include Form 8862 with your tax return this year if:

  • You’ve filed it before, were allowed to claim the credits, and your credits haven’t been denied or reduced since then.
  • You’re claiming EIC without a qualifying child this year. In addition to this, your previous denied claim can only be because the child previously listed wasn’t considered a qualifying child.
  • You received a CP74 from the IRS stating that you’ve been recertified.

Pro Tip

Claiming the earned income tax credit when you’re not eligible can get you in trouble with the IRS. If you intentionally disregard the rules, the IRS could ban you from claiming the EIC for two years. If fraudulent claims were made, the ban could be extended to 10 years. So make sure you carefully read the qualification rules before claiming EIC on your tax return.

Do I qualify for EIC?

The IRS estimates that around 21% to 26% of EIC claims are paid in error each year. Though some were unintentional, other claims were intentional regardless of the rules. To avoid getting in trouble with the law, here are the basic requirements you should know to qualify for EIC.

To qualify for EIC for the 2021 tax year, you must:

  • Have worked during the year and earned an income of less than $57,414.
  • Have investment income below $10,000.
  • Have a valid Social Security number.
  • Be a U.S. resident and live in the States for more than half the year.
  • Not file Form 2555.
  • Not qualify a child on another return.
  • Not use the married filing separate (MFS) filing status.

Also, when claiming EIC on your tax return, be sure to avoid these common mistakes:

  • Claiming a child that doesn’t meet the qualification rules.
  • Having more than one person claim the child.
  • Misspelling the names or inputting Social Security numbers incorrectly.
  • Using a filing status of married filing separately.
  • Over or underreporting earnings or expenses.

How long do I have to file Form 8862?

Form 8862 should be filed with your tax return. This means that you have until the tax deadline to file, which is typically April 15 each year (unless the day falls on a holiday or weekend).

Make sure that you have Form 8862 ready to go days or even weeks before the deadline. This way, you’ll have enough time to fill out the form correctly, and avoid making mistakes.

Can IRS Form 8862 be filed electronically?

Yes, IRS Form 8862 can be filed electronically. Simply include it with the rest of your tax return when you e-file. Typically, all online tax software will provide a Form 8862 for you to fill out. However, you might have to use the paid software version to access this feature.

Key Takeaways

  • Form 8862 is a document that the IRS requires to be filed when certain tax credits have been disallowed in a prior year. This allows taxpayers the opportunity to reclaim the credits for the current and future tax years.
  • If you’ve been previously denied the earned income credit, child tax credit, credit for other dependents, additional child tax credit, or the American opportunity tax credit, you’ll need to file Form 8862 to once again claim them on your return.
  • You can download Form 8862 from the IRS website, which you can file either electronically or by mail.
  • Claiming earned income tax credit fraudulently or with disregard for the rules can cause you to be banned by the IRS for 2 to 10 years. This means you won’t be able to claim EIC on your tax returns during the time you’re banned.
  • Make sure to understand the basic qualification rules for EIC before claiming the credit, as mistakes could cause a delay in your returns or denial of the entire credit.

Know when to use Form 8862

If you were previously denied tax credits due to a mistake, Form 8862 allows you to start over with the IRS and reclaim those credits that were disallowed or reduced. Filling out this form is an extra step in your tax preparation process, it could help you receive the correct tax return amount from Uncle Sam.

Not filing your taxes on time, or not filing it at all, can get you into trouble with the IRS and incur tax debt. So, if you’re having trouble filling out Form 8862, don’t hesitate to contact a tax professional for help, or use tax preparation software to simplify the process.

View Article Sources
  1. About Form 8862, Information To Claim Certain Credits After Disallowance — IRS
  2. Tax Season Refund Frequently Asked Questions — IRS
  3. IRS Letters and Notices: What To Do If You Got One — SuperMoney
  4. What Is Tax Planning? A Guide For Beginners — SuperMoney
  5. How to Get Out of Tax Debt: Options and Solutions — SuperMoney
  6. Do I Have To Pay Taxes On My Checking Account? — SuperMoney
  7. What Happens If You Don’t File Taxes? — SuperMoney
  8. Best Tax Preparation Firms | April 2022 — SuperMoney