England grants Usain Bolt a competition tax exemption
The perfect Valentine's Day gift: a marriage tax penalty or marriage tax bonus calculator

Mistakes on child tax credit form are delaying some returns

Yet another tax paperwork hurdle has popped up in this year's filing season path.

No, it's not one of the dozens of forms that the Internal Revenue Service is still working to update. It's an oldie but goody document that was updated back in December, the Schedule 8812.

Schedule 8812 was used in prior tax years to compute and claim the additional tax credit.

Here's how it looked for the 2011 tax year.

Schedule 8812 additional child tax credit tax year 2011Click image to see full form.

New for the 2012 tax year, this document now is also used in some cases by taxpayers claiming the plain old $1,000 per kid child tax credit. Now when a youngster has an individual tax identification number, or ITIN, instead of a Social Security number, or SSN, a Schedule 8812 must be filed with Form 1040 or Form 1040A.

Here's a snippet of what the revised 2012 Schedule 8812 looks like:

Schedule 8812 child tax credit ITIN tax year 2012
Click image to see full form.

An ITIN is a tax processing number created for certain nonresident and resident aliens, their spouses and dependents who cannot get a Social Security number. In order for a child to qualify for a child tax credit claim, that youth usually must be a U.S. citizen, national or resident.

But in cases where the child has an ITIN, Part 1 of Schedule 8812 helps show that the child meets the substantial presence test -- that is, lives with the adult taxpayers for the requisite amount of the tax year -- and therefore is eligible to be claimed for child tax credit purposes.

Part 2 of the schedule will look familiar to many filers. It's the prior year version where the additional child tax credit is claimed.

Trouble with the 2012 format: These changes have apparently caused some confusion.

"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 this week. "These instances are causing downstream processing delays."

English translation: You're going to have to wait for the mistakes to be cleared up before you'll get any refund.

Essentially, the IRS is getting a lot of these schedules where the filers are doing exactly the opposite of what is asked.

The new Part 1 of Schedule 8812 is where taxpayers claiming the child tax credit for kids with ITINs attest that their kiddos met the substantial presence test, explained in the schedule's instructions.

But some filers, reports the IRS, are checking one or more of the A through D boxes (for kids one through four; another line deals with more than four children claimed) for dependent children who have Social Security numbers.

If your kids have Social Security numbers or adoption taxpayer identification numbers, or ATINs, you don't need to fill out Part 1. Just enter your credit amount on your 1040 or 1040A.

Conversely, in other cases Part 1 check boxes are not being checked when taxpayers do have children with ITINs.

The bottom line is that if your kids have Social Security numbers, you don't need to fill out Schedule 8812 to claim the child tax credit.

You will need the schedule, however, even if your kids have SSNs and you also can claim the additional child tax credit. In this case, skip right over Part 1 and its boxes and go to Part 2 to see how much of this refundable tax credit you can get.

And if your kids have ITINs instead of SSNs, then do fill out Part 1 and, if you're eligible, Part 2 for the additional child tax credit.

Finally, while the IRS notified tax preparers about this latest tax processing problem, take care if you do your own taxes and don't make these Schedule 8812 mistakes in claiming the child tax credit.

You also might find these items of interest:


Feed You can follow this conversation by subscribing to the comment feed for this post.

The comments to this entry are closed.