Financial Glossary
Form 8862 (Reclaiming Disallowed Credits)
Form 8862 is filed to claim certain tax credits, such as the Earned Income Tax Credit, Child Tax Credit, or American Opportunity Credit, after the IRS has previously reduced or disallowed them for a reason other than a math or clerical error. By submitting it with the current return, the taxpayer demonstrates they now meet the eligibility rules. Without the form, the IRS will continue to disallow the affected credit even if the taxpayer qualifies.
Problem & Application
Owner-operators whose income fluctuates year to year may qualify for a credit one year, lose it the next, and become eligible again, triggering the need for Form 8862 to restore it. Filing it correctly avoids a continued denial that can cost a household meaningful refund dollars. The form is also a reminder that a prior disallowance does not permanently bar a credit once the underlying eligibility is met again.
In Short
Form 8862 is the path back to credits the IRS previously denied, provided you now meet the rules. Check current IRS guidance for which credits and situations require it.