Publication 596: Earned Income Credit (EIC); Disallowance of the EIC

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Table of Contents

If your earned income credit (EIC) for any year after 1996 was denied (disallowed) or reduced by the IRS, you may need to complete an additional form to claim the credit for 2003.

This chapter is for people whose earned income credit (EIC) for any year after 1996 was denied or reduced by the IRS. If this applies to you and you want to claim the credit for 2003, you may need to complete Form 8862, Information To Claim Earned Income Credit After Disallowance, and attach it to your 2003 return. This chapter explains when you need to attach Form 8862. For more information, see Form 8862 and its instructions.

This chapter also explains the rules for certain people who cannot claim the EIC for a period of years because their EIC was denied or reduced.

Form 8862

If your EIC for any year after 1996 was denied or reduced for any reason other than a math or clerical error, you must attach a completed Form 8862 to your next tax return if you wish to claim the EIC.

Your EIC for 2001 or 2002 was reduced or disallowed only because the IRS determined that one or both of the children listed on your Schedule EIC were not your qualifying children for that year, and
You are claiming the EIC without a qualifying child for 2003.

The date on which your EIC was denied and the date on which you file your 2003 return affect whether you need to attach Form 8862 to your 2003 return or to a later return. The following examples demonstrate whether Form 8862 is required for 2003 or 2004.

Example 1.

You filed your 2002 tax return in March 2003 and claimed the EIC with a qualifying child. The IRS questioned the EIC, and you were unable to prove the child was a qualifying child. In September 2003, you received a statutory notice of deficiency telling you that an adjustment would be assessed unless you filed a petition in the Tax Court within 90 days. You did not act on this notice within 90 days. Therefore, your EIC was denied in December 2003. If you wish to claim the EIC with a qualifying child on your 2003 return, you must complete and attach Form 8862 to that return. However, if you wish to claim the EIC without a qualifying child on your 2003 return, you do not need to file Form 8862.

Example 2.

The facts are the same as in Example 1, except that you received the statutory notice of deficiency in February 2004. Because the 90-day period referred to in the statutory notice is not over when you are ready to file your return for 2003, you should not attach Form 8862 to your 2003 return. However, if you wish to claim the EIC with a qualifying child for 2004, you must complete and attach Form 8862 to your return for that year. If you wish to claim the EIC without a qualifying child for 2004, you do not need to file Form 8862.

Exception for math or clerical errors. If your EIC was denied or reduced as a result of a math or clerical error, do not attach Form 8862 to your next tax return. For example, if your arithmetic is incorrect, the IRS can correct it. If you do not provide a correct social security number, the IRS can deny the EIC. These kinds of errors are called math or clerical errors.

Omission of Form 8862. If you are required to attach Form 8862 to your 2003 tax return, and you claim the EIC without attaching a completed Form 8862, your claim will be automatically denied. This is considered a math or clerical error. You will not be permitted to claim the EIC without a completed Form 8862.

Additional documentation may be required. You may have to provide the IRS with additional documentation before a refund relating to the EIC you claim is released to you, even if you attach a properly completed Form 8862 to your return.

If your EIC for any year after 1996 was denied and it was determined that your error was due to reckless or intentional disregard of the EIC rules, then you cannot claim the EIC for the next 2 years. If your error was due to fraud , then you cannot claim the EIC for the next 10 years. The date on which your EIC was denied and the date on which you file your 2003 return affect the years for which you are prohibited from claiming the EIC. The following examples demonstrate which years you are prohibited from claiming the EIC.

Example 3.

You claimed the EIC on your 2002 tax return, which you filed in March 2003. In October 2003, the IRS denied your claim and determined that your error was due to reckless or intentional disregard of the EIC rules. You cannot claim the EIC for tax year 2003 or 2004. If you wish to claim the EIC on your return for 2005, you must complete and attach Form 8862 to your return for that year.

Example 4.

The facts are the same as in Example 3, except that the IRS did not disallow your 2002 EIC until after you filed your 2003 return. You cannot claim the EIC for tax year 2004 or 2005. If you wish to claim the EIC on your return for 2006, you must complete and attach Form 8862 to your return for that year.

Example 5.

You claimed the EIC on your 2002 tax return, which you filed in February 2003. In December 2003, the IRS denied your claim and determined that your error was due to fraud. You cannot claim the EIC for tax years 2003 through 2012. If you wish to claim the EIC on your return for 2013, you must complete and attach Form 8862 to your return for that year.