CP79: You Must Prove You Qualify Before Claiming Certain Credits Again

Why you might get this

• The IRS audited (closely reviewed) your tax return for a past year.
• During that review, the IRS disallowed (turned down) one or more credits you claimed, such as the Earned Income Tax Credit, Child Tax Credit, or American Opportunity Tax Credit.
• Because of that decision, the IRS now wants you to show you're eligible before you claim these credits on a future return.

The deadline

This notice does not ask you to act by a set date right now. It tells you what to do going forward: the next time you want to claim one of these credits, you'll need to attach the right form to your return to show you qualify. If you disagree with the audit, you can ask the IRS to look at it again and send proof — do this by the timing described on your notice.

This notice doesn't carry a fixed response deadline, but it still deserves attention — see what to do below.

What to do

1. Read the notice carefully so you understand which credits it covers.
2. Go over it with your tax preparer if you use one.
3. Review the rules for each credit to make sure you'll qualify before claiming it again.
4. When you claim one of these credits on a future return, complete and attach Form 8862, Information to Claim Certain Credits After Disallowance.
5. If you disagree with the audit, ask the IRS for an audit reconsideration and send documents showing you were entitled to the credits.
6. Note: To claim the Earned Income Credit for yourself without qualifying children, you generally do not need Form 8862.

What happens if you ignore it

There's no immediate penalty for this notice alone since it doesn't require action now. But if you later claim one of these credits without attaching Form 8862 (when it's required), the IRS can deny the credit again and delay or reduce your refund.

If money is tight or the audit feels overwhelming, you may qualify for free help from the Taxpayer Advocate Service or a Low Income Taxpayer Clinic. You can also authorize someone to represent you before the IRS.

What the CP79 notice means

Getting a CP79 notice means the IRS reviewed one of your past tax returns and turned down a credit you claimed. Going forward, you'll have to show you qualify before you can claim that credit again.

The notice usually covers credits like the Earned Income Tax Credit, the Child Tax Credit (including the Additional and Refundable versions), the Credit for Other Dependents, or the American Opportunity Tax Credit for education.

Right now, you don't have to do anything. The IRS is letting you know the rules for next time. When you're ready to claim one of these credits again, you'll complete and attach Form 8862, Information to Claim Certain Credits After Disallowance, to your tax return. That form is how you prove you're eligible.

If you think the audit was wrong, you can ask for an audit reconsideration and send documents backing up your claim.

Take a moment to review the credit rules — and your notice — with a tax preparer if you have one, so your next return goes smoothly.

Solace can keep an eye on your IRS account and let you know if anything changes.