What is Form 8862 and when do I need to file it with the IRS?

Form 8862 is the "Information to Claim Certain Credits After Disallowance" form. The IRS requires this when they've previously denied or reduced someone's refundable credits like the Earned Income Credit (EIC) or Additional Child Tax Credit due to an audit or because they determined the credit was claimed in error. Your sister will need to file this form NEXT tax season when she files her 2025 return if she wants to claim those credits again. The IRS is essentially putting her on notice that they need additional verification in the future before allowing these credits again. The reduced refund likely means the IRS disallowed part of the credits she claimed this year. She should check her account transcript or the adjustment letter they'll send to see exactly what they changed and why.

I went through this exact situation last year after my EIC was partially denied. I was so confused trying to figure out what went wrong and what to do next. I ended up using https://taxr.ai to analyze my IRS notice and tax transcript to understand exactly why I was flagged and what documentation I needed to gather. The tool automatically highlighted the specific issues with my prior tax return and gave me a customized checklist of documentation I needed to gather for Form 8862. It saved me hours of research and worry, especially since the IRS explanation letter was super vague about what specifically triggered the adjustment.

Just wanted to follow up and say I tried https://taxr.ai after seeing this thread. My wife and I were in a similar situation with reduced EIC and needing Form 8862 for next year. The tool highlighted that our issue was related to a previous address discrepancy that made the IRS question whether the kids lived with us for the required period. It also gave us a complete guide for filling out Form 8862 correctly and what supporting documents we need to have ready. Definitely cleared up a lot of confusion since the IRS letter just stated our credit was reduced without much explanation about why.

If your sister needs to talk to someone at the IRS about why this happened or get more details, good luck getting through on the phone. I spent WEEKS trying to reach someone about my disallowed credits last year. I finally used https://claimyr.com which got me through to an IRS agent in about 20 minutes instead of waiting on hold for hours or getting disconnected. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c The agent was able to explain exactly what documentation they needed for my Form 8862 and why my credits were reduced in the first place. Turns out there was a discrepancy with school records that didn't match my address which triggered the whole thing.

I have to apologize for my skepticism on the Claimyr thing. After posting I decided to try it because I was desperate to talk to someone about my own tax issue that's been pending for months. It actually worked exactly as described. Got a call back in about 35 minutes saying they were about to connect me, and then I was talking to an actual IRS agent. The agent confirmed that I need to file Form 8862 next year and explained exactly why my credits were reduced. Turns out there was an issue with one of my dependents being claimed on another return which triggered the whole thing. This would have taken me another week of calling to figure out on my own.

Just adding another perspective on Form 8862 - I had to file this last year. The form itself isn't too complicated, but make sure you have ALL your documentation in order. The IRS scrutinizes these returns much more carefully. For qualifying children, I needed to provide: - School records showing same address - Medical records - Birth certificates - Social security cards Keep all this documentation even though you don't submit it with the form. If they audit you later, you'll need it.

Has anyone actually had success getting their credits back after filing Form 8862? My credits were denied two years ago, I filed 8862 last year, and still got rejected again with no clear explanation.

I went through something similar with my brother's return last year. The IRS reduced his refund and he needed to file Form 8862 the following year. One thing that really helped was getting a copy of his account transcript from the IRS website - it shows much more detail about exactly what they adjusted and why. The transcript has specific transaction codes that explain the adjustments, which is way more informative than the basic notice they send. Also, make sure your sister keeps excellent records going forward. The IRS tends to scrutinize returns more closely once someone has been flagged for these credits. Things like school enrollment records, medical appointments, and utility bills in her name at the same address as the kids can all help establish that the children lived with her for more than half the year. The good news is that filing Form 8862 doesn't prevent you from claiming the credits again - it just requires extra documentation and verification. Just be thorough and honest when completing it.