IRS Form 8862 is used by taxpayers who wish to reclaim the Earned Income Tax Credit (EITC) after it was previously disallowed by the IRS. If the IRS denies your claim for the EITC due to errors or other issues, you must file Form 8862 to re-establish your eligibility and claim the credit again in a future tax year.
Common reasons for disallowance include:
- Incorrectly reporting earned income.
- Misunderstanding eligibility rules for the EITC.
- Filing errors or omissions on the original tax return.
When filing Form 8862, taxpayers must provide detailed information about their eligibility for the credit, including income levels and qualifying dependents. The IRS will review the form and determine whether the taxpayer can reclaim the EITC in the current year.
It’s important to accurately complete Form 8862, as repeated errors or misrepresentations may lead to penalties or a longer disallowance period for the EITC.