IRS Notice CP08: What Is It and How Should You Respond?
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Summary:
IRS Notice CP08 notifies taxpayers that they may qualify for the Additional Child Tax Credit (ACTC). The ACTC is fully refundable and designed to provide additional assistance to families who may have little or no tax liability. Taxpayers who receive the notice should carefully review it and fill out two forms, Form 15110 and Form 1040 (Schedule 8812), to claim the credit. Taxpayers can expect to receive their refund in 8 to 10 weeks after the IRS processes their tax return, but filling out the forms does not guarantee receipt of the credit.
It’s not often fun to receive a letter from the IRS. However, if you receive a CP08 Notice from the IRS, it could actually be helpful. Why?
Keep reading to learn more about the CP08 Notice and what it means for your tax return.
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What is IRS Notice CP08?
IRS Notice CP08 is a notice from the Internal Revenue Service (IRS) alerting you that you may qualify for an Additional Child Tax Credit. Most taxpayers who receive this notice initially got less than the full amount for their Child Tax Credit when they first filed.
What’s the difference between the ACTC and CTC?
The Child Tax Credit (CTC) and the Additional Child Tax Credit (ACTC) are both tax credits that provide financial assistance to families with qualifying children. However, there are some important differences between the two.
- Refundability. The CTC is partially refundable, meaning that taxpayers can receive a refund of up to $1,400 per qualifying child even if they do not owe any income tax. The ACTC, on the other hand, is fully refundable, which means that taxpayers can receive the full amount of the credit even if it exceeds their income tax liability.
- Income limitations. The CTC is subject to income limitations. The credit begins to phase out for single taxpayers with modified adjusted gross income (MAGI) above $200,000 or $400,000 for married taxpayers filing jointly. The ACTC, however, is available to taxpayers with lower income levels, as it is designed to provide additional assistance to families who may have little or no tax liability.
- Maximum credit amount. The maximum amount of the CTC is $2,000 per qualifying child, while the maximum amount of the ACTC is the lesser of the taxpayer’s ACTC or the excess of the taxpayer’s Social Security taxes over their earned income credit.
Overall, the CTC and ACTC are both important tax credits for families with qualifying children. However, the ACTC is more generous to lower-income families and is fully refundable, while the CTC has a higher maximum credit amount and is only partially refundable.
How should you respond to IRS Notice CP08?
To ensure you meet all qualifications, carefully review the notice. If you qualify, you’ll need to fill out two different forms: Form 15110, Additional Child Tax Credit Worksheet, and Form 1040 (Schedule 8812), Credits for Qualifying Children and Other Dependents. Once you’ve completed and signed both forms, you can mail or file the forms online using the IRS’s online upload tool.
IMPORTANT! Keep in mind that filling out these forms doesn’t guarantee you’ll receive the ACTC. Notice CP08 simply states that you may qualify for the tax credit, not that you will receive it.
FAQs
When can I expect to receive my return?
After reviewing your Form 1040 and Form 15110, the IRS will assess your eligibility for the credit. If they find that you aren’t eligible, you’ll receive a letter that explains the reason for denial. However, if you do not owe any other outstanding amount, you can expect to receive your refund in 8 to 10 weeks.
In case you do not receive any update from the IRS within this timeframe, call 800-829-1954 to check the status of your refund.
Can I still get the Additional Child Tax Credit if my child turns 18 this year?
Unfortunately, no. To qualify for both the Child Tax Credit and the Additional Child Tax Credit, your child must be under 18 years old at the end of the tax year.
Key Takeaways
- IRS Notice CP08 is a notification stating that you may qualify for the Additional Child Tax Credit (ACTC). This is a fully refundable tax credit for families with qualifying children who may have little or no tax liability.
- The Child Tax Credit (CTC) and the ACTC are both tax credits that provide financial assistance to families with qualifying children. However, the ACTC is more generous to lower-income families and is fully refundable, while the CTC has a higher maximum credit amount and is only partially refundable.
- Taxpayers who receive IRS Notice CP08 should carefully review the notice to ensure that they understand how to claim the credit. To claim the ACTC, taxpayers must fill out two forms: Form 15110 and Form 1040 (Schedule 8812).
- If the IRS determines that a taxpayer is eligible for the ACTC, they can expect to receive their refund in 8 to 10 weeks after the IRS processes their tax return.
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