The CP08 is another "good news" notice from the IRS. They reviewed your return and determined you may be eligible for the Additional Child Tax Credit, which is the refundable portion of the Child Tax Credit. If you qualify, this credit can increase your refund even if you owe no tax.
How It Works
The Child Tax Credit has two components. The nonrefundable portion reduces your tax liability dollar for dollar, but only to zero. The Additional Child Tax Credit (the refundable portion) can generate a refund beyond your tax liability. Some taxpayers claim the nonrefundable portion but miss the refundable portion, leaving money on the table.
What to Do
The CP08 includes a worksheet or instructions to determine whether you qualify. Complete the worksheet, and if you're eligible, follow the instructions to claim the credit. The IRS will adjust your return and issue an additional refund.
If you use tax software and it didn't calculate the Additional Child Tax Credit, the software may have had incorrect information about your qualifying children or your earned income. Review the inputs and consider filing an amended return if the original return was incorrect.
Don't Ignore This
The Additional Child Tax Credit can be worth over $1,600 per qualifying child. If you have two or three qualifying children, you could be leaving thousands of dollars unclaimed. The CP08 is the IRS pointing this out. Take 15 minutes to complete the worksheet.
If you're not sure whether you qualify, call us at (813) 229-7100.