Disallowance Rules for EIC, CTC, and AOTC: When 8862 Is Required

(UNITED STATES) The Internal Revenue Service has tightened attention on repeated filing errors tied to the Earned Income Credit (EIC), the American Opportunity Tax Credit (AOTC), the Child Tax Credit (CTC), the Additional Child Tax Credit (ACTC), and the Credit for Other Dependents (ODC). Taxpayers whose claims were denied for reasons beyond a simple math or clerical mistake face a formal Disallowance that can block access to these benefits for years. To claim these credits again after a denial not caused by math or clerical error, the IRS requires taxpayers to submit Form 8862—“Information To Claim Certain Credits After Disallowance”—with their tax return.

Policy rules and waiting periods

Under IRS rules, the length of time a taxpayer is barred from claiming the affected credit depends on why the claim was denied.

• If the IRS finds the denial was due to a taxpayer’s reckless or intentional disregard of the rules, the taxpayer is blocked from claiming the relevant credit(s) for 2 years.
• If the IRS determines the denial was due to fraud, the taxpayer is blocked for 10 years.

During these 2-year or 10-year periods, the credits cannot be claimed at all. The agency treats these as final determinations tied to the most recent year in which the problem occurred.

The focus on Disallowance aims to stop repeat filing errors and false claims while leaving a path for taxpayers who can meet the rules going forward. According to analysis by VisaVerge.com, the requirement to use Form 8862 after a Disallowance serves as a certification step that the filer now meets every eligibility rule for the particular credit they want to claim.

When the Disallowance was not caused by a math or clerical mistake, the IRS directs the taxpayer to attach Form 8862 to the next return on which they try to claim the credit.

Which credits and years are affected

The Form 8862 obligation applies across several credits—EIC, CTC/ACTC/ODC, and AOTC—whenever a prior claim was reduced or denied for reasons other than math or clerical error for a tax year after 1996.

• The form contains sections and questions tailored to each credit’s eligibility rules.
• It must be filed by the tax return deadline when required.
• If the form is missing when needed, the IRS may reject the credit claim.

When Form 8862 is required — and when it isn’t

While Form 8862 is generally required after a prior Disallowance, there are important exceptions.

Exceptions (no Form 8862 required)
– If, after the earlier reduction or denial, the taxpayer later filed Form 8862 (or other documents) and the credit was allowed — and the credit has not been reduced or disallowed again for any reason other than a math or clerical error — the taxpayer does not need to file the form again.
– A special EIC exception: If the only reason the IRS reduced or denied EIC in a prior year was that a child listed on Schedule EIC was not the taxpayer’s qualifying child, the taxpayer can later claim EIC without a qualifying child without filing Form 8862, provided they meet all eligibility rules.

In both exception scenarios, the key is that the taxpayer must fully meet the credit’s requirements at the time of the new claim.

No-file periods for Form 8862
– Taxpayers should not file Form 8862 during the 2 years after the most recent tax year in which there was a final determination that a claim was due to reckless or intentional disregard.
– They also should not file the form during the 10 years after the most recent tax year in which there was a final determination that a claim was due to fraud.

In either case, the taxpayer cannot take the affected credit(s) during those barred periods.

Common scenarios — quick reference

1. Prior credit reduced or denied (non-math/clerical), now meet rules:
   • Must attach Form 8862 to the return to claim the credit again.
2. Prior denial followed by filing Form 8862 and the IRS allowed the credit, with no later non-math/clerical denial:
   • No need to file Form 8862 again for future claims (so long as eligibility continues).
3. Claiming EIC without a qualifying child, prior reduction/denial only because a listed child did not qualify:
   • Can claim EIC later without Form 8862, if all current rules are met.
4. IRS found reckless or intentional disregard:
   • Cannot claim affected credit(s) for 2 years; do not file Form 8862 during that period.
5. IRS found fraud:
   • Cannot claim affected credit(s) for 10 years; do not file Form 8862 during that period.

Form 8862 and Schedule EIC — practical notes

• Form 8862 is a gatekeeping document: it signals that the taxpayer is now fully eligible and is trying to take the credit again after a non–math/clerical Disallowance.
• The form’s eligibility questions are designed to match each credit’s rules, so completing it carefully matters.
• Missing the required Form 8862 when it is needed can cause the IRS to reject a new claim for the credit.

For filers focused on the EIC, EITC is central when qualifying children are involved. If the earlier Disallowance was only because a listed child was not a qualifying child, the rules allow the filer to claim EIC without a qualifying child later—without needing Form 8862—so long as the filer meets all other eligibility conditions in that year.

If a taxpayer asserts eligibility for a child-based EIC after a prior Disallowance for a non–math/clerical reason, Form 8862 must accompany the return unless one of the narrow exceptions applies.

Deadlines, bars, and timing

• The waiting periods are strict. A 2-year bar follows a final IRS finding of reckless or intentional disregard; a 10-year bar follows a final finding of fraud.
• Both bars run from the most recent tax year tied to the IRS’s final determination.
• During those timelines, the affected credits cannot be claimed at all, and Form 8862 should not be filed.
• After the barred period ends, a taxpayer who again meets all rules may attach Form 8862 to claim the credit—unless an exception removes the filing requirement.

Steps taxpayers should take

Taxpayers who believe they meet all eligibility rules after a non–math/clerical Disallowance can take these core steps:

1. Confirm whether the prior IRS action was a reduction or denial for reasons other than math or clerical error.
2. Check whether an exception applies:
   • Prior Form 8862 accepted with no further non–math/clerical Disallowance, or
   • Claiming EIC without a qualifying child after a prior child disqualification.
3. If no exception applies and the barred periods do not apply, attach Form 8862 to the return by the filing deadline to request the credit again.

Important: Filing Form 8862 by the tax deadline is essential because the IRS may reject the credit claim if the required form is missing.

Where to find official guidance

• IRS page for Form 8862: https://www.irs.gov/forms-pubs/about-form-8862
• Schedule EIC information: https://www.irs.gov/forms-pubs/about-schedule-eic-form-1040
• EITC resource pages on IRS.gov: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit-eitc

Officials stress that Form 8862 is only required when the earlier reduction or denial was not simply a math or clerical mistake. If a taxpayer’s only issue in a prior year was a math slip, they do not need the form to claim the credit again.

When a non–math/clerical Disallowance occurs, the IRS expects the taxpayer to attach Form 8862 to the next return where the credit is claimed. Filing it by the tax deadline is essential because the IRS may reject the claim if the required form is missing.

These rules, while strict, provide a clear map for restoring access to credits when the taxpayer can show they now meet every requirement. As VisaVerge.com reports, the structure balances the need to deter improper claims with a way for eligible taxpayers to claim benefits again after correcting past issues, using Form 8862 as the certification step.