Code 420 on Transcript - Is This an Audit or Just Verification for Dependents?

There's actually a technical difference between an audit and an examination for dependents. A full audit typically reviews your entire tax return and can look back at multiple years. What you're describing is more likely a correspondence examination that's focused on exactly 1 issue - verifying your dependents. In 2023, the IRS conducted 117,248 of these dependent verifications compared to only 26,543 full audits for similar income levels. It's much more routine and limited in scope.

Have you tried calling the IRS to get more information about your specific case? I know it can be frustrating to wait on hold for hours, but wouldn't it be better to know exactly what they're looking for? I've been in a similar situation and wasted weeks preparing documents they didn't even need. Have you considered using Claimyr (https://claimyr.com) to get through to an agent faster? They can connect you directly to an IRS representative without the endless hold times. Wouldn't it be worth it to get a clear answer about exactly what documentation they need for your specific situation?

Have you tried checking your transcript online? That might give you more details about what exactly they're looking for. When I went through something similar, my transcript showed exactly which tax credits were being reviewed. I was frustrated at first too, but once I knew exactly what they needed, it was much easier to gather the right documents. Could you access your transcript through the IRS website?

This is a dependent verification. Not a full audit. Common procedure. Happens frequently. IRS is checking eligibility. Provide requested documents promptly. Keep copies of everything. I recommend using taxr.ai to analyze your transcript. It explains codes clearly. Shows exactly what's happening with your return. Identifies which credits are under review. Gives timeline expectations based on similar cases.

I went through this exact process last year. The 420 code specifically means the IRS has selected your return for examination of a specific issue - in your case, dependent verification. Based on my experience and research, you'll need to provide proof of relationship (birth certificates), residency (school records, medical records, lease with children listed), and that you provided more than half their support. I found that organizing these documents by category and including a cover letter explaining each document saved time. My verification took 8 weeks from submission to approval, which was faster than the 12 weeks they initially quoted.

OK so here's the deal - the IRS uses diff terminology that confuses everyone. An "examination" is technically an audit, but there are diff types and levels. What you have is a "correspondence examination" (aka mail audit) focusing only on dependent eligibility. NBD compared to a full-blown field audit. For docs, you'll need: - Proof of relationship (birth cert, adoption papers) - Proof of residency (school records showing your address, medical records) - Proof of support (receipts showing you paid >50% of their expenses) Organize everything by category, make copies of EVERYTHING, and send via certified mail so you have proof of delivery. Don't stress too much - these are routine, esp for people claiming CTC or EIC.

Have you considered calling the Taxpayer Advocate Service? They can sometimes help navigate these situations, especially if you're facing financial hardship while waiting for your refund. They're technically separate from the IRS and can sometimes cut through red tape faster. I had a similar issue last year (though mine was for education credits, not dependents) and they were surprisingly helpful. Just don't tell them I sent you... they're probably drowning in cases already! 😂

Has anyone here actually gone through this process recently? I'm seeing so much conflicting information online about dependent verification timelines! Some people say it takes 6-8 weeks, others say months!!! I'm really worried because the letter doesn't give a clear timeframe for how long this will take. 😫

I think it's important to note that the IRS has been increasing these verification requests since they expanded the Child Tax Credit. I've been following the numbers, and they're definitely doing more of these checks than in previous years. From what I understand, they're trying to reduce improper payments while still getting benefits to eligible families. If your documentation is solid, you should be fine, but be prepared for it to take some time. The IRS is still working through staffing shortages from the pandemic.

I went through this exact same thing two years ago with Code 420! The IRS rep was right - it's technically called an "examination" but it's really just verification for your dependents, not a full audit of your entire return. I was stressed about it too, but it ended up being pretty straightforward. I sent in birth certificates, school enrollment records showing my address, and some medical records. The whole process took about 10 weeks from when I mailed everything back to when my refund was released. Just make sure to send everything certified mail and keep copies of absolutely everything. The key is responding quickly with all the documentation they asked for - don't wait or send partial info because that just delays everything. You've got this!

I just went through this same process last month! The confusion about "examination" vs "audit" terminology is totally understandable - I had the same questions. What you're dealing with is definitely a correspondence examination focused solely on dependent verification, not a comprehensive audit of your entire return. From my experience, the process was much more straightforward than I initially feared. I gathered birth certificates, school records showing my address, medical records, and documentation showing I provided more than half of their support (like receipts for food, clothing, healthcare, etc.). The whole thing took about 9 weeks from submission to resolution. One thing that really helped me was creating a simple cover letter that listed each document I was including and which requirement it was addressing. This seemed to speed up the review process. Also, definitely send everything via certified mail with return receipt - it gives you proof of delivery and peace of mind. The key is to respond promptly with ALL the requested documentation in one package. Don't send partial responses thinking you'll send more later, as that just restarts the clock. You've already gathered the right types of documents, so you're on the right track! Try not to stress too much - these verifications are routine and as long as your dependents are legitimate (which they obviously are), you'll be fine.

I'm dealing with a Code 420 situation right now too and this thread has been incredibly helpful! I received my letter about 2 weeks ago asking for dependent verification for my daughter. Initially I was panicking thinking I was being audited, but after reading everyone's experiences here, I feel much more confident about the process. I've already started gathering the documents - birth certificate, school enrollment records, medical records from her pediatrician that show my address, and receipts showing I cover her expenses. One question though - for the "support" documentation, do grocery receipts count? I don't have individual receipts for every single thing I buy for her, but I do all the grocery shopping and have those receipts. Also, would bank statements showing regular deposits into her savings account help demonstrate financial support? Thanks to everyone who shared their timelines and tips - especially about the certified mail and cover letter approach. It's so much less scary when you hear from people who actually went through it successfully!

I completely understand your confusion about the terminology! I went through a Code 420 dependent verification last year and had the exact same questions. The IRS representative was correct - it's technically called an "examination" but it's really just a focused review of your dependent claims, not a full audit of your entire return. Here's what helped me get through it smoothly: I organized all my documents into clear categories with labels (relationship proof, residency proof, support proof) and included a simple cover letter listing each document and what it was proving. For my two kids, I provided birth certificates, school records showing our address, medical records, and a mix of receipts showing I covered their major expenses - groceries, clothing, medical bills, school supplies, etc. The whole process took about 8 weeks from when I mailed everything back to when my refund was released. The key things that seemed to speed it up were: responding quickly with ALL requested documents at once (don't send partial submissions), using certified mail for proof of delivery, and making sure everything was clearly organized so the reviewer could easily match documents to requirements. You already have the right documentation gathered, so you're in great shape! Try not to stress too much - these verifications are becoming more routine, especially with the expanded Child Tax Credit, and as long as your dependents are legitimate (which they obviously are), you'll get through this just fine.

I just wanted to add my perspective as someone who went through this exact situation about 6 months ago. The Code 420 dependent verification really threw me off initially because nobody explains that "examination" and "audit" have different technical meanings in IRS-speak. What really helped me was creating a simple spreadsheet tracking all my dependent-related expenses for the year - things like medical copays, school fees, clothing purchases, etc. I didn't need to provide every single receipt, but having that organized overview made it much easier to demonstrate that I was providing more than 50% support. One tip I haven't seen mentioned yet: if you have any joint custody situations or complex family arrangements, include a brief written explanation along with your documents. The IRS reviewers appreciate context, especially when living situations aren't straightforward. My timeline was almost exactly 9 weeks from mailing to resolution, and my full refund was released once they completed the verification. The waiting is definitely the hardest part, but it sounds like you have all the right documentation ready to go. Just remember - they're not trying to deny legitimate claims, they're just verifying eligibility due to increased scrutiny on tax credits. You've got this!

I went through this exact same Code 420 verification process about 4 months ago and can definitely relate to the confusion about terminology! The IRS rep was absolutely right - it's technically an "examination" but it's really just dependent verification, not a full audit of your entire return. Here's what worked for me: I created a simple checklist based on the letter they sent and gathered documents for each requirement. For relationship proof, I used birth certificates. For residency proof, I included school enrollment records and medical records that showed my address. For support proof, I gathered receipts for major expenses like daycare, medical copays, school supplies, and even some grocery receipts to show I was covering daily needs. The process took exactly 7 weeks from when I mailed everything back (certified mail with return receipt) to when my refund was released. One thing that really helped was including a brief cover letter that said something like "Enclosed please find the requested documentation for my Code 420 dependent verification" and then listed each document and which child it pertained to. Don't stress too much about having perfect documentation for every single expense - they understand that families don't keep receipts for everything. Focus on showing clear proof of relationship, that the kids live with you, and that you're providing their primary financial support. You already have the key documents gathered, so you're well-prepared! The waiting is definitely the hardest part, but these verifications are routine and straightforward when you respond promptly with organized documentation.