The purpose of IRS Form 8862 in 2017 is to help the Internal Revenue Service (IRS) prevent taxpayers from claiming the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), or American Opportunity Credit (AOTC) if they had previously been denied or subjected to limitations on these credits due to issues like fraud or inaccuracies on their tax returns.
Form 8862 is used as a reconciliation tool to ensure that individuals who were previously denied these credits have resolved the issues and are now eligible to claim them. It acts as a safeguard to ensure that taxpayers do not continuously claim these credits without legitimate qualifications or due to discrepancies in previous filings.
When taxpayers apply for any of these credits and are denied or restricted, they must complete Form 8862, formally titled the "Information to Claim Earned Income Credit after Disallowance." This form requires individuals to provide detailed information, such as the tax years they were previously denied or limited, the reason for denial, and the corrective actions taken to rectify the issue.
By filling out Form 8862, taxpayers demonstrate to the IRS that they have resolved any previous disqualifying factors and now meet the necessary requirements to claim the credits. The IRS then reviews the form and supporting documents to determine if the taxpayer is eligible to receive the EITC, CTC, or AOTC for the respective tax year.
It is important for taxpayers to accurately complete Form 8862 to avoid any delays or rejections in claiming these tax credits. Failing to provide the required information or submitting false information can result in penalties, denied claims, or even further scrutiny from the IRS.
Overall, the purpose of IRS Form 8862 in 2017 is to maintain the integrity of tax credits and ensure that they are only issued to eligible individuals who meet all the necessary criteria, preventing misuse and potential fraudulent claims.