3 Steps To Take If Your Child Tax Credit Claim Was Denied, According to Experts
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Kerra Bolton
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If a Child Tax Credit claim was denied but should have been approved, there are clear steps to challenge the decision.
The Child Tax Credit provides up to $2,000 per qualifying child under 17 to help families manage the cost of raising children. Experts say a denial may stem from issues like missing documentation or eligibility errors.
Here are three steps to take if a Child Tax Credit claim is denied, according to the experts.
Next, learn which states offer child tax credits.
Confirm Eligibility Requirements
Misunderstandings about eligibility for the Child Tax Credit are one of the most common reasons the IRS denies claims.
For example, the taxpayer may earn too much to meet IRS eligibility requirements.
“The credit starts to phase out at the modified adjusted gross income of $200,000 for single filers and $400,000 for joint filers,” said Mark Luscombe, principal analyst for Wolters Kluwer’s Tax and Accounting Division North America.
Experts also note that custody issues resulting from a divorce can affect eligibility. For example, the taxpayer may not have provided child support, or the child didn’t live with them for at least half the year.
“It’s not just about who gets to claim the child — it’s about understanding the IRS rules, filing status and potential red flags that could trigger a denial,” said Melissa Murphy Pavone, CDFA and founder of Mindful Divorce Partners, a firm that specializes in divorce financial planning.
“If a Child Tax Credit claim is denied, it’s often because both parents tried to claim the same child or the claiming parent doesn’t meet the IRS requirements,” Pavone added.
Find the Error
Before appealing the IRS decision, identify the specific issue. The IRS typically sends a notice explaining why a claim was denied.
“It may be that the taxpayer was not entitled to the credit, or it may be that an error was made that can be corrected,” Luscombe said.
Missing or incorrect information can also trigger a denial.
“The taxpayer may have failed to obtain a Social Security number [for a newborn child] by the time the tax return is filed,” Luscombe explained. “Or the Social Security name on file with the Social Security Administration does not match the Social Security number on the tax return.”
Sometimes, the denial is related to offsets from other debts.
“The credit was, in fact, allowed, but not paid due to the refund being offset by federal tax debts, state income tax, child support obligations or defaulted student loans,” Luscombe said.
Submit a Response
Taxpayers can try to reverse the IRS’s decision by filing Form 8862, “Information to Claim Certain Credits After Disallowance.”
“Depending on the reason for denial, the supporting documents should establish entitlement to the credit: evidence of the age of the child, support status, living status, any custodial agreements between the parents or a correct Social Security number,” Luscombe said.
He said taxpayers should work with a tax professional who understands the rules for claiming the credit.
“In a divorce situation, the co-parents can agree in a settlement or divorce agreement who is entitled to claim the credit, as long as the greater-than-one-half-of-the-year residency requirement is met by the claiming co-parent,” Luscombe said.
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