What This Notice Means

This notice goes to paid tax return preparers. The IRS believes you incorrectly claimed one or more of these on your clients' returns:

  • Earned Income Tax Credit (EITC)
  • American Opportunity Tax Credit (AOTC)
  • Child Tax Credit, Additional Child Tax Credit, or Credit for Other Dependents
  • Head of household filing status

It's a warning. The point is to get you to follow your due diligence requirements so you and your clients avoid penalties and other unwanted actions.

What to Do

Review Internal Revenue Code section 6695(g) and Treasury Regulation section 1.6695-2. Then compare your intake and documentation process against the mistakes the IRS sees most often.

EITC

  • Underreported wages, or misreported Schedule C income and expenses.
  • Claiming children who aren't the client's child, sibling, grandchild, niece, or nephew.
  • Claiming children who didn't live with the client for more than 6 months.
  • Claiming EITC for a married client who doesn't file jointly and doesn't meet the additional rules.
  • A household helper claiming EITC with no matching Form W-2, 1099-MISC, or 1099-NEC from the person the work was done for.

AOTC

  • A student with no Form 1098-T, or who didn't attend an eligible institution at least half-time for an academic period.
  • A student with no qualified education expenses.
  • A student who had already completed four years of post-secondary school, or already received the credit for four years.
  • A student not pursuing a degree, certificate, or other recognized credential.

CTC, ACTC, and ODC

  • A child or dependent who didn't meet the relationship, residency, or age requirements.

Why It Matters

Treat this notice as the first step. Fix your questioning, documentation, and record retention now, before the IRS looks harder at your returns.

If you're a preparer who received a CP590 notice and want to protect your practice, call us at (813) 229-7100.