Filing Tax Form 8862: Information to Claim Earned Income Credit after Disallowance
The Earned Income Credit (EIC) is a valuable, refundable tax credit available to low and moderate income taxpayers and families. If your EIC was disallowed or reduced for reasons other than math or clerical errors after 1996, you may need to file Form 8862 before the Internal Revenue Service allows you to use the credit again.
Key Takeaways
- You need Form 8862 to claim the Earned Income Credit (EIC) again after it's been disallowed or reduced for reasons other than math or clerical errors.
- There's a waiting period to claim your EIC after a disallowance; it's two years if due to reckless or intentional disregard of the rules, and ten years if due to attempted fraud.
- To claim your EIC, you must meet several requirements, including being a U.S. citizen or resident alien, having earned income, and not being a qualifying child on another return.
- If you're claiming the EIC with a qualifying child, you must complete Schedule EIC before filing Form 8862, ensuring the child meets specific criteria like age, relationship, and residency.
EIC requirements
Several standards must be met for you to claim the EIC:
- You have to be a citizen of the United States and live in the U.S. for more than half of the year.
- You are required to have earned income for the tax year and a valid Social Security number (SSN).
- You can't be a qualifying child on another return.
- You can't use the married filing separate (MFS) filing status.
Eligible taxpayers may claim the credit either with or without a qualifying child. Taxpayers without a qualifying child must be at least age 25 and under age 65 and not be a dependent or a qualifying child of another. Income limitations also apply. Income guidelines for the current tax year are listed in Publication 596: Earned Income Credit.
Schedule EIC
Schedule EIC, which is used to claim the Earned Income Credit with a qualifying child, must be completed prior to filling out Form 8862. The IRS defines a qualifying child as the child, an eligible foster child, brother, sister or descendant of the taxpayer's child, brother or sister. The child must be younger than the taxpayer (or spouse if filing jointly) and, under age 19 or a full-time student under age 24 or, any age if totally and permanently disabled. Additionally, the child must have lived with the taxpayer for more than half the year and not file a joint return. You may claim up to three qualifying children for the EIC.
TurboTax Tip:
You don't have to file Form 8862 if your EIC was denied or reduced because you claimed a child who wasn't a qualifying child in a prior year and you're claiming the credit without a child this year.
Exceptions
Form 8862 does not need to be filed if you meet certain exceptions. You do not need to file it if the EIC was denied or reduced because you claimed a child who was not a qualifying child in a prior year, and you are claiming the credit without a child this year. If you already filed Form 8862, you do not need to file it again unless your EIC has been reduced or denied again after the original filing. In other words, you only need to file Form 8862 once for each time the credit is disallowed.
Considerations
There is a waiting period to claim the EIC after a disallowance. Its length is determined by the nature of your disallowance. If you were deemed reckless or had intentional disregard for the rules, the waiting period is two years. It's 10 years if the disallowance was determined to be attempted fraud. Form 8862 must be attached to your tax return if you are e-filing. If it's not, the IRS could reject your return.
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