IRS denied my EITC last year, but I qualify this year, what should I do?
A) If the IRS denied your Earned Income Tax Credit (EITC) claim last year, but you believe you qualify for the credit this year, you should claim the credit on your current year tax return.
When claiming the EITC, you will need to complete and attach Schedule EIC (Earned Income Credit) to your tax return. You will also need to provide documentation to prove that you meet the eligibility requirements for the credit, such as proof of earned income and the number of qualifying children.
If the IRS denied your EITC claim last year because you made an error on your tax return, you should review your previous tax return to identify any mistakes that were made and ensure that your current year tax return is accurate. If the IRS denied your EITC claim due to fraud or intentional disregard of the rules, you may be subject to penalties and interest.
It’s important to note that the eligibility requirements for the EITC can change from year to year, so even if you were denied the credit in a previous year, you may still qualify for the credit in the current year. If you have any questions or concerns about claiming the EITC on your tax return, you should consult a tax professional or contact the IRS for assistance.
According to the IRS – If IRS denied or reduced your EITC for any year after 1996 for any reason other than a math or clerical error, you must qualify to claim the credit by meeting all the rules described above and you must attach a completed Form 8862, Information to Claim Earned Income Credit After Disallowanceto your next tax return to claim EITC.
But, do not file Form 8862 if either (1) or (2) below is true.
1. After your EITC was reduced or disallowed in the earlier year:
- You filed Form 8862 (or other documents) and then IRS allowed, your EITC and
- IRS did not reduce or disallow your EITC again for any reason other than a math or clerical error.
2. You are taking EITC without a qualifying child and the only reason IRS reduced or disallowed your EITC was because a child listed on Schedule EIC was not your qualifying child.
Also, you cannot claim EITC or use the Form 8862 to claim EITC for:
- 2 years after IRS made a final determination to reduce or disallow your EITC due to reckless or intentional disregard of the EITC rules, or
- 10 years after IRS made a final determination to reduce or disallow your EITC due to fraud.