CP18 Notice: Discrepancies in Claimed Credits

The CP18 Notice is sent by the IRS to notify taxpayers of discrepancies in the tax credits they claimed on their return. These discrepancies often arise when there is a mismatch between the amount claimed and the IRS’s records or if the taxpayer claimed credits they were not eligible for. The CP18 Notice will detail the adjustments made to the return based on the corrected credit amounts.

Key points in the CP18 Notice:

• Credits Adjusted: The notice will specify which credits were adjusted, such as the Earned Income Tax Credit, Child Tax Credit, or education-related credits. The IRS may reduce or disallow the credit if the taxpayer’s income or other eligibility factors do not match their records.
• Refund or Balance Due: Depending on the adjustments, the taxpayer may see a reduced refund or, in some cases, an additional balance owed. The notice will provide a breakdown of how the changes impacted the overall tax liability.
• Dispute Process: Taxpayers who disagree with the IRS’s adjustments can dispute the CP18 Notice by providing documentation that supports their original credit claims. The notice will outline how to submit additional information for review.
• Correcting Future Returns: If the taxpayer made an error in claiming credits, it’s important to correct the issue on future returns to avoid receiving similar notices.

The CP18 Notice is a critical document for taxpayers whose credits have been adjusted and may result in a lower refund or higher tax bill than anticipated.