Return with EITC rejected. Says must have 8862, but EITC has never been disallowed.

[Catmom]

MFJ with a 9 year old son. Income in $25-30K range. Have been claiming EITC since son was born. EITC has never been disallowed. E-Filed 2020 return and got a reject notice Code F1040-164-01 that says Form 8862 must be present in the return.

[PATAX]

Could someone else have claimed that child?

[Catmom]

The reject notice doesn't say that the child has already been claimed. It says taxpayers must file Form 8862 because EITC has been previously disallowed.  Except EITC has never been disallowed.

[PATAX]

Catmom, please do not take this the wrong way... But how are you so sure that it has not been disallowed in a prior year? Could it be that the client may not have been aware that it was disallowed , or maybe the client may have forgotten that it was disallowed? ...I am not sure of what happened....., I am just trying to help you... Just my opinion....

[clr600]

Have you talked to your client and asked the same questions if so then you must fill a 8862 or call the IRS after you get a Form 2848 signed

[Catmom]

PATAX, no offense taken at all!  After 34 years preparing taxes, I know how clients can be.  These clients have been with me for 9 years, and I know them pretty well.  I thought they surely would have called me if they got a letter saying their EITC was disallowed.  But I still called them this afternoon and asked them that question.  They said "No!  We would have called you immediately if anything like that ever happened!"  I really don't think it's ever been disallowed, and am wondering if there is some kind of glitch. I've seen this same issue discussed in the ProSeries Support Facebook group, but no one ever got a satisfactory answer.  Thanks for your help.

[Catmom]

I called the client this afternoon.  They are insistent that the EITC has never been disallowed.  I believe them, because they would have called me immediately if their refund was reduced.

[The-Tax-Lady]

I have clients that insist alot of things did or did not happen. Get the 8821 or 2848 signed and call the Practioner's line and find out the real story.

[Catmom]

Update - Called PPS and they said no indication that EITC has ever been denied. 2019 refund was issued with no issues, and it also included EITC. One thing had changed on the 2020 tax return, though, and PPS agent wondered if it caused a problem.  Wife had always been listed as TP and her husband as spouse. For 2020, I switched them since husband is the only one working now. I was careful to change all the taxpayer/spouse indicators etc. I don't see why this would cause the issue, but it did. I redid the return with wife as TP as it was done in the past. It was accepted.

[davemathew76]

I have the same problem right now with a customer. He says it may be possible his ex has claimed the son, he does not speak to her. However he has had legal custody for over five years, she signed away parental rights and hasn't seen the child in 4 years. He has not had this problem in the previous years. It's possible he has always filed before she had a chance to before? This is the first year he has waited til the last moment. He doesn't even know how to get in contact with her to ask her, if she would even be honest about it. Is there any way to find out the exact reason for the rejection, instead of just getting 'cause you need to fill out this form, which main purpose is for something that does not apply? I loathe the IRS, so many rules always changing.

[The-Tax-Lady]

Same advice, get an 8821 signed by your client and find out what really is taking place. 

If the ex did file with the dependent child, you will have to paper file your client's return with the documentation that proves he is the custodial parent.

IRS rules generally change at the direction of Congress, the people that work at the IRS aren't anymore thrilled about the constant changes than you or I.