Need help with IRS Form 8885 - Not sure if I messed up my tax return

OK so what would happen if the OP just does nothing? Would the IRS just deny the credit and adjust the return, or could there be penalties for claiming a credit they're not eligible for? Also how would someone even know if they qualify for this HCTC thing? I've never even heard of it!

The IRS will almost certainly just deny the credit if the taxpayer doesn't qualify, especially if it appears to be an honest mistake. They'll send a letter explaining the adjustment and either reduce the refund or send a bill if needed. Penalties for this type of honest error are extremely unlikely. To know if you qualify for the HCTC, you would have received specific documentation. You'd either be receiving Trade Adjustment Assistance benefits because your job was affected by foreign trade, or you'd be receiving pension payments from the Pension Benefit Guaranty Corporation (typically because your employer's pension plan failed). These are pretty specific situations, and affected individuals typically know their status.

How does this work with complicated situations? I've got income from multiple states, some 1099 work, and honestly my tax situation is a mess. Would this actually help or just be another tool that gets confused by anything more complex than a basic return?

I'm skeptical of any tax service that claims to instantly identify issues. Does it actually connect with the IRS database to verify things? And how much does it cost? Those "free" services always end up charging for anything beyond the most basic features.

It actually handles complex situations really well! I had income from both W-2 employment and a side business with 1099s, plus some investment income. The system is designed to analyze all different types of forms and situations, so multiple state income shouldn't be a problem at all. The service doesn't need to connect directly to the IRS because it works by analyzing your tax documents and the information you provide. It uses the same rules and logic that tax professionals use, but it's automated. And regarding cost - I was surprised that it was actually affordable considering how much time and stress it saved me. They don't use the "free-then-upgrade" trick that the big tax prep companies use.

Wait how does this actually work? Are they somehow jumping the phone queue at the IRS? That seems sketchy, like those services that claim to get you concert tickets ahead of everyone else.

Yeah right. I've tried EVERYTHING to get through to the IRS and nothing works. There's no way this service actually gets you through in 20 minutes when the IRS themselves say wait times are 2+ hours. Sounds like a scam to take desperate people's money.

It's completely legitimate and works with the IRS's existing phone system. The service uses an automated system that navigates the IRS phone tree and waits on hold for you. When an agent finally picks up, you get a call connecting you directly to that agent. No line-cutting or anything sketchy - they're just handling the frustrating wait time for you. It's similar to those services that help you cancel subscriptions or deal with customer service issues - they're using technology to solve a frustrating problem. The IRS is aware these services exist and they don't have any issues with them since it actually helps manage their call volume by reducing repeated hang-ups and callbacks.

Thank you all SO MUCH for the helpful responses! I definitely don't receive any Trade Adjustment Assistance or PBGC payments, so it sounds like I shouldn't have included Form 8885 at all. I'm going to file an amended return this weekend to remove it. Would it be better to use a different tax service than H&R Block for the amendment since they're the ones who confused me in the first place?

You don't necessarily need to switch tax services. H&R Block should be able to prepare an amended return for you. However, if you're not confident in them after this experience, you might consider using a different service or even consulting with a tax professional for the amendment. The most important thing is to file the amendment correctly to remove Form 8885 entirely. Make sure the amended return clearly shows you're no longer claiming the Health Coverage Tax Credit. Also keep in mind that amended returns can take 16+ weeks to process, so patience will be necessary after you submit it.

Not OP but sometimes tax software will ask general questions about health coverage and depending on how you answer, it might add forms you don't actually need. I've had H&R Block try to add a premium tax credit form for me even though I had employer coverage and wasn't eligible.

The software asked me some questions about healthcare coverage, and I think I must have answered something incorrectly. I definitely didn't manually add Form 8885 - I had never even heard of it before this whole mess! I just checked my health insurance documentation, and I had regular employer coverage all year. Clearly I clicked something wrong in the interview questions. Lesson learned to pay closer attention to those details in the future!