EITC audit: documenting the earned income credit on your return

What the notice is

When the IRS audits a return for the earned income credit, it commonly sends a CP75 or CP75D. The IRS explains the CP75 as a request for documentation to verify the credit you claimed, and says that while the audit is open it holds the credit portions of your refund. Selection does not mean you made an error or were dishonest.

The CP75D page says the IRS needs documents to verify income and withholding, which may affect the credit, dependent claims and other refundable credits. The notice number printed on your letter tells you which IRS explanation page to read. Neither page gives a deadline, so check the response date on your own notice.

What they usually ask you to prove

Expect questions about three things: income, who lived with you and for how long, and who you are claiming. Picture a single parent who claimed a niece and her own child. The IRS may want proof of where each child lived, and who supported each, along with the income documents.

• Income and withholding records, such as wage statements and pay stubs
• Proof of the relationship and where each person lived, such as school or medical records showing your address
• Evidence of who provided support
• Records that show your filing status

How dependents are tested

The IRS dependents page describes two categories. A qualifying child meets five tests: relationship, age, residency, support and joint return. The age test is under 19, under 24 if a full-time student, or any age if permanently and totally disabled. A qualifying relative has different tests, including a gross income limit and providing more than half of the person's support. Check the current IRS page for the limit.

Dependents generally cannot be claimed on more than one return, so if another person also claimed the same child, expect questions. Gather evidence that speaks to each test instead of assuming the relationship settles it.

Sending your response

The CP75 page says to send copies of the requested documents all at once, using the upload tool, fax, or mail with the response form. Do not send originals. Label each page with the item it supports, and keep a duplicate of the whole package.

If you cannot provide documentation for an item, the IRS says it will disallow the audited items and send an examination report. You can still explain in a cover letter why a record is unavailable and what you are doing to get it.

What a denial can mean for later returns

If the IRS denies or reduces the credit for a reason other than a math or clerical error, you generally must attach Form 8862 to your next return claiming it, unless an exception applies. The IRS page also describes multi-year bans after a finding of reckless or intentional disregard, which is two years, and a longer ban after a fraud finding, and mentions that you may have to repay with interest. The page does not explain how to dispute a denial, so look to your notice for appeal instructions.

If a preparer filed your return

IRS EITC resources describe due diligence rules for paid preparers, but those pages are for professionals. For you, the practical step is simple: gather the same documents the notice requests and ask the preparer for their copy of the file. IRS Audit Defense Pro is software that helps you organize your facts and draft a response letter you review and send yourself; it is not a law firm, CPA or enrolled agent.

Frequently asked questions

Sources

• IRS: Understanding your CP75 notice
• IRS: Understanding your CP75D notice
• IRS: What to do if we deny your claim for a credit
• IRS: Dependents

Related guides

• CP75 and CP75A: the IRS wants proof for your creditsA CP75 or CP75A is a correspondence audit.
• Correspondence audit: how an IRS audit by mail worksA correspondence audit is an IRS audit handled entirely by mail.
• Cover letter for answering an IRS audit document requestAn audit response cover letter references the IRS's request, answers each numbered item in order, lists the photocopies you are sending, asks the examiner to confirm receipt, and gives a contact.
• How to appeal the results of an IRS auditIf you disagree with audit findings, respond to the letter that proposes the changes by the date it gives, which is generally 30 days.
• The Taxpayer Advocate Service: Help When an IRS Problem StallsThe Taxpayer Advocate Service is an independent office within the IRS that can help when an IRS problem is causing financial hardship, has gone unresolved for more than 30 days, or the IRS missed a promised date.
• IRS Notice Glossary: What the Terms Actually MeanAn IRS notice glossary translates the vocabulary in letters and audits, such as deficiency, assessment, lien, levy, abatement, Appeals and transcript, into plain language so you can tell what the IRS is proposing, what it is asking you to do, and what the next step is.