The Internal Revenue Service is cautioning tax preparers about delays in processing tax returns claiming the Child Tax Credit because of incorrectly filled out forms.
“We have observed instances in which the Schedule 8812 is attached to form 1040 and 1040A and is not filled out correctly,” the IRS wrote in an email to tax professionals Monday. “These instances are causing downstream processing delays.”
The IRS noted that it has experienced the following two conditions: (1) The Schedule 8812 Part 1 checkboxes A, B, C, and D are checked when taxpayers list a dependent child with a Social Security Number qualifying for the Child Tax Credit; and (2) the Schedule 8812 Part 1 checkboxes A, B, C, and D not being checked when taxpayers have a child with an Individual Taxpayer Identification Number, or ITIN, on Form 1040 and 1040A line 6c identified as qualifying for the Child Tax Credit in column 4.
The Schedule 8812 instructions direct the taxpayer, the IRS noted, to “use Part I of Schedule 8812 to document that any child for whom you entered an ITIN on Form 1040, line 6c; Form 1040A, line 6c; or Form 1040NR, line 7c; and for whom you also checked the box in column 4 of that line, is a resident of the United States because the child meets the substantial presence test and is not otherwise treated as a nonresident alien.”
The IRS said it is working to implement business rules to reject these incorrectly completed returns, but the date of the fixes has yet to be determined.
In the meantime, the IRS is requesting tax prep software providers to include an alert to help tax preparers identify inconsistencies when they are completing the Schedule 8812. It also asked for communication with the tax practitioner community to avoid delays in processing tax returns.
An Accounting Today reader also warned Monday evening that the IRS has been sending letters to tax practitioners informing them that Form 8867 was not completed correctly, resulting in unnecessary processing delays in client refunds because either questions 22 or 23 were not answered. However, if the children in question are the taxpayer’s son or daughter, this question does not apply, the reader noted. Practitioners may also be informed that questions 26 a or b were not answered, or the box labeled "no qualifying child" or the box labeled "no disabled child."