3.12.3  Individual Income Tax Returns (Cont. 35)

3.12.3.81 
Error Codes 270 to 276 (ACA)

3.12.3.81.10 
Error Code 279 AND 579, Child and Dependent Care Credit

3.12.3.81.10.9  (01-01-2015)
Fields 2104 and 2105, Primary and Secondary Earned Income (EC 279)

  1. The taxpayer may be entitled to the credit when they indicate that they were "looking for work" during the tax year. They are not entitled to the credit if they were unemployed the entire year and had no earned income. This would apply to either spouse on a joint return, or a taxpayer filing as Head of Household. Only expenses incurred for the care of a child or a qualifying individual are acceptable. SSPND 211, when the expenses claimed appear to be other than for child care, such as "mileage" , "resume copying" , etc.

  2. Examine the signature area and occupation box of the return to determine if one spouse is deceased, disabled or a full-time student when line 4 or 5 is blank on a FSC 2 return. Manually verify and enter credit in Field 21CCV when FSC is 2 and there is an indication that either primary or secondary taxpayer died during the tax year. If the surviving spouse did not have any earned income, they do not qualify for the credit.

    Note:

    If filing status 2 and the taxpayer or spouse died during the tax period, the taxpayer is not considered married for purposes of figuring the Child and Dependent Care Credit. The surviving spouse must have earned income to qualify for the credit. If the surviving spouse did not have any earned income, they do not qualify for the credit.

  3. For each month or part of a month that a taxpayer was disabled or a full-time student at a school during any 5 months, he/she is considered to have earned income of $250 ($500 if more than one qualifying person). Use the following table to resolve:

    If number of months disabled/student … Then…
    A] Are present, 1. Multiply number of months by $250 ($500 for 2 or more qualifying individuals). See exception.
    2. Enter result in Field 2104 or 2105 as applicable.
    B] Are not present, SSPND 211 to correspond for number of months.

    Exception:

    The following two conditions apply to A].

    1. If the taxpayer worked during the month, the higher of the actual earned income or $250 ($500 if more than one qualifying person) would be reported.

    2. If FSC 2 and both spouses were either students or disabled, only one spouse would be considered to have earned income of $250 ($500 if more than one qualifying person).

  4. Delete the entry in Field 2104 or 2105 and assign TPNC 233 when the entry on line 4 or 5 of Form 2441 is a loss.

  5. If Filing Status is 2, both the primary and secondary taxpayer must have earned income. Assign TPNC 233 when one or both taxpayers have no earned income.

  6. Adjust the amount in Field 2104 and/or 2105 using the earned income present on the return, if line 4 and/or 5 of Form 2441 is the same as the taxpayer's entry on line 64a (line 41a, Form 1040A) for Earned Income Credit (EIC). Assign TPNC 232 when EC 279 redisplays.

  7. Determine Earned Income amount(s) using Form W-2(s), Schedule(s) SE (minus line 27, Form 1040), and any other earned income present, and enter in Field(s) 2104 and/or 2105, when line 4 and/or 5 of Form 2441 is blank.

    Note:

    If Filing Status is 2, both primary and secondary taxpayers must have income, be disabled or a full-time student to qualify for the credit.

    Note:

    For FSC 1, 3, 4, 5 or 6, do not enter an amount into Field 2105 unless the taxpayer has an amount on line 5 of Form 2441.

  8. If no other errors are identified in Child and Dependent Care Credit, assign the previous TPNC when the earned income has been adjusted because of a previous error.

3.12.3.81.10.10  (01-01-2015)
Field 21PYE, Prior Year Expenses (EC 279)

  1. Field 21PYE is an ERS input only field.

    Note:

    Field 21PYE is a transcribed field on E-File returns. Verify that the taxpayer has included the required documentation (See the following (3) Note).

  2. Do not enter Field 21PYE if the taxpayer did not use the prior-year expenses in the computation of the credit. The computer limits this amount to $1,440.

  3. Enter the amount from the dotted portion of line 9 in Field 21PYE when the taxpayer has entered an amount, with a name and SSN, and a statement is attached showing how the credit was computed.

    1. The statement may reflect the amount of Child Dependent Care Expenses paid, not the Child Dependent Care Credit claimed on line 9, Form 2441 as instructed by Publication 503, Worksheet A.

    2. After transcribing the taxpayer's line 9, Form 2441 (Prior Year Expenses) in Field 21PYE and Field 0449> (0431>, Form 1040A) is not the same as Field 0449 (0431, Form 1040A) determine if the taxpayer failed to multiply the expenses by the decimal on line 8, Form 2441. Multiply the amount on the statement by the decimal on line 8, Form 2441. Enter the amount in Field 21PYE.

    3. If EC 279 redisplays, reenter the taxpayers' line 9, Form 2441, Prior Year Expenses and enter the taxpayers line 11 amount in Field 21CCV.

    Note:

    The taxpayers must include the name and SSN of the person for whom they paid the prior-year expense and must attach a statement to Form 2441 showing how they figured the additional amount for Child and Dependent Care Credit.

  4. Assign TPNC 236 when the taxpayer included an amount for prior-year expenses in the computation, but did not include a name and SSN on the dotted portion of line 9 or did not attach the required statement.

    Note:

    MeF only - Delete the entry in Field 21PYE prior to assigning TPNC 236.

  5. Check to see if line 9, Form 2441 is the same amount as line 49 of Form 1040 (line 31 of Form 1040A). If so and if there is also an amount on the dotted portion of line 9 that the taxpayer did not use in the computation, delete the amount in Field 21PYE.

3.12.3.81.10.11  (01-01-2015)
Fields 2112, 2116 and 2125, Dependent Care Benefits (EC 279)

  1. If Part III is complete, the amount on line 31 of Form 2441, should be carried back to line 3. Adjust the entry in Field 2103 accordingly when the amount is in error or incorrectly carried over to line 3. Then assign TPNC 237.

  2. When there is an entry in Field 2112 , then there should be an entry in Field 2116. Determine the amount from Form W-2 when the taxpayer failed to enter an amount on this line but attempted to complete this portion of the form. Leave the entry blank if unable to determine.

3.12.3.81.10.12  (01-01-2015)
Correction Procedures (EC 579)

  1. Refer to all instructions for EC 279 and also refer to IRM 3.12.3.5.9 for Non-Compute information.

  2. Correct coding and transcription errors and misplaced entries in displayed fields.

  3. Enter C in the Clear field if there are no corrections to be made.

3.12.3.81.10.13  (01-01-2015)
Prior Year (EC 279)

  1. TY96 and later. There is math error authority for missing/invalid TIN. The computer will compute the credit when any of the following conditions are present:

    • The NAP Access Indicators are not (2 or 9) and Field 21CSR is zero.

    • Field 21CSR is 1, 2 or 3.

    • Field 21CCV is present.

  2. If more than $3,000 ($2,400 for TY02 and prior) is claimed on line 3 for Child and Dependent Care expenses, the amount will be limited to $3,000 ($2,400 TY02 and prior) for one child, $6,000 ($4,800 TY02 and prior) for 2 or more Child Care Dependents.

  3. TY96 and before. Code and Edit will edit the number of Qualifying Individuals from box on line 3 of Form 2441. Determine Field 21QI as follows when the box is 0 (zero), dash or blank:

    • If the line 4 amount is $2,400 or less, enter 1 in Field 21QI.

    • If the line 4 amount is greater than $2,400, enter 2 in Field 21QI.

3.12.3.81.10.14  (01-01-2015)
Allowable Taxpayer Notice Codes (Form 1040 and Form 1040A) (EC 279)

  1. This table shows the allowable Taxpayer Notice Codes for Error Code 279.

    Note:

    The following Taxpayer Notice Codes are shown in a condensed format. The complete version of each is listed in the Taxpayer Notice Codes, Exhibit 3.12.3–2, in the back of the IRM.

  2. If you are processing a conversion-a return converted to Form 1040-you must assign TPNC 111 in addition to other applicable notice codes.

    Note:

    Always assign TPNC 111 first.

    TPNC Description
    100  
    111 Your return has been converted to a Form 1040.
    218 We computed your tax for you. (Form 1040/A)
    220 Recomputed your tax using the tax table, tax rate schedules, or capital gains tax computations. We were unable to accurately compute Form 8615 due to a math error on another part of your return. (Form 1040)
    230 We found an error in the addition of your Alternative Minimum Tax to your Tentative Tax on page 2 of your return. (Form 1040)
    232 Computed or transferred Form 2441 incorrectly. (Form 1040/A)
    233 No earned income, Form 2441. (Form 1040/A)
    234 You failed to provide a correct Identifying Number (TIN) for your Care Provider on Form 2441. We disallowed your Credit for Child and Dependent Care Expenses accordingly. (Form 1040/A)
    235 Since you did not include a Social Security number for your dependent(s), we did not allow your credit for Child and Dependent Care. (Form 1040/A)
    236 Disallowed credit for prior-year expenses on Form 2441. Missing dependent name, SSN, or statement showing how you figured the credit. (Form 1040/A)
    237 Computed or transferred the Part III amount on Form 2441 incorrectly. (Form 1040/A)
    238 Disallowed credit for child and dependent care because primary taxpayer, spouse, or dependent claimed as care provider. (Form 1040/A)
    239 We didn’t allow the Child and Dependent Care Credit because your filing status is married filing separately.
    530 We computed your rate reduction on 2001 return. (Form 1040)
    558 You gave us information that changed the amount of tax you owe. (Form 1040/A)
    562 No Reply, number of months as student, disabled, or looking for work. (Form 1040/A)
    563 No Reply, Form 2441. (Form 1040/A)
    564 We didn’t allow the amount claimed as credit for child and dependent care expenses. The name and social security number or individual taxpayer identification number for the child or dependent that qualifies you for the credit listed on line 2 of your Form 2441 doesn’t match our records or the records provided by the Social Security Administration. (Form 1040/A)
    604 You failed to provide a SSN on Form 2441 for children and/or dependents for which you incurred care expenses. We disallowed your Credit for Child and Dependent Care Expenses accordingly. (Form 1040/A)
    605 You failed to provide a correct SSN for at least one of your dependents. We adjusted your Credit for Child and Dependent Care Expenses accordingly. (Invalid) (Form 1040/A)
    606 We did not allow the exemption claimed for any dependent born after December 31 of the tax year of the return you filed.
    This change may affect your taxable income, tax, or any of the following credits:
    • Credit for Child & Dependent Care Expenses

    • Child Tax Credit

    • Additional Child Tax Credit

    (Form 1040/A)
    607 Primary taxpayer deceased prior to the tax period. Exemption disallowed. (Form 1040/A)
    608 Secondary taxpayer deceased prior to the tax period. Exemption disallowed. (Form 1040/A)
    609 We did not allow the exemption claimed for any dependent deceased prior to the tax period of the return. (Form 1040/A)
    *** Any previously assigned TPNC.

3.12.3.81.11  (01-01-2015)
Error Code 280, Schedule R and Social Security (EC)

  1. Error Code 280 instructions follow.

3.12.3.81.11.1  (01-01-2015)
Fields Displayed, Form 1040 and Form 1040A (EC 280)

  1. The following fields are displayed:

    1040 1040A Field name
    0315A 0311A Total IRA Distributions
    0315B 0311B Taxable IRA Distributions
    0316A 0312A Gross Pensions and Annuities
    0316B 0312B Taxable Pensions and Annuities
    0320A 0314A Gross Social Security
    0320B 0314B Taxable Social Security
    >>>> >>>> Taxable Social Security Computer
    1613C 1613C Other Pensions and Annuities
        Section XX Not Present

3.12.3.81.11.2  (01-01-2015)
Invalid Conditions (EC 280)

  1. Error Code 280 generates when Schedule R (Section 16) is present and Gross Social Security (Field 0320A/0314A) less Taxable Social Security Computer (Field 0320B/0314B underprint) is greater than Other Pensions and Annuities (Field 1613C).

3.12.3.81.11.3  (01-01-2015)
Correction Procedures (EC 280)

  1. Correct coding and transcription errors and misplaced entries in displayed fields.

  2. Any Pension, Annuity, or Disability Benefit that the taxpayer indicates are excluded from income under any provision of the law must be added to the difference between Gross Social Security and Taxable Social Security Computer.

  3. If Taxable Social Security Computer is different from Taxable Social Security taxpayer, enter the difference between Gross and Taxable Social Security Computer in Field 1613C. Also, include any excludable amounts as stated in (2).

3.12.3.81.12  (01-01-2015)
Error Code 282 and 582, Credit for the Elderly or the Disabled

  1. Error Code 282/582 instructions follow.

3.12.3.81.12.1  (01-01-2015)
Fields Displayed, Form 1040 and Form 1040A (EC 282)

  1. The following fields are displayed:

    1040 1040A Field name
    01TXP 01TXP Tax Period
    01FSC 01FSC Filing Status Code
    01EXC 01EXC Exemption Code Field
    01RPC 01RPC Returns Processing Code
    01ACD 01ACD Audit Code
    04ABI 04ABI Age and Blindness Indicator
    01PYB> 01PYB> NAP Primary Year of Birth
    01SYB> 01SYB> NAP Secondary Year of Birth
    0454C 0432 Credit for the Elderly
    16GC> 16GC> Gross Credit for Elderly Computer
    0454C> 0432> Credit for Elderly Computer
    16FSI 16FSI Filing Status Age Indicator Code
    1611 1611 Taxable Disability Income
    1613C 1613C Other Pensions and Annuities
    1620V 1620V Credit for the Elderly/Disabled Verified
    0337 0321 Adjusted Gross Income
    >>>> >>>> Adjusted Gross Income Computer
    0444 0428 Tentative Tax
    >>>> >>>> Tentative Tax Computer
    0447> 0430> Income Tax Before Credits
    0463 0439 Total Tax IMF
    0463> 0439> Total Tax Liability Computer
    >>>> >>>> Total Tax IMF Computer
        Section XX Not Present

3.12.3.81.12.2  (01-01-2015)
Invalid Conditions (EC 282)

  1. Error Code 282 generates when both of the following exist:

    1. The taxpayer's amount for Credit for the Elderly or Disabled (Field 0454C/0432) differs from the computer's amount.

    2. A math error is present.

  2. Error Code 582 generates when a math error is not present and either of the following exist:

    1. The return is a Non-Compute.

    2. Any of the allowable Carryover Statutory Credits differ from their respective computer-generated amounts.

3.12.3.81.12.3  (01-01-2015)
Correction Procedures (EC 282)

  1. Correct coding and transcription errors and misplaced entries in displayed fields.

  2. If the computer underprint for a personal credit is more than the amount claimed by the taxpayer, compare line 47 of Form 1040 with the figure in Field 0447> if the computer's underprint for a personal credit is more than the amount claimed by the taxpayer. If the taxpayer made an error in adding line 44, 45 and 46, assign TPNC 230.

  3. For TY09 and later, the dedicated line for the Credit for the Elderly or the Disabled was removed from Form 1040. Taxpayers write the credit on Form 1040, line 54, and check box C. Enter the credit amount in Field 0454C.

  4. The Gross Credit for the Elderly or the Disabled, Field 16GC>, will generate as zero when the maximum income limits or nontaxable social security and pensions limits are exceeded. Assign TPNC 240 if Schedule R is attached and any of the following conditions exists:

    If Field 16FSI Code is... And the amount on line 37 Form 1040 (line 21 of Form 1040A) is... Or Field 1613C is...
    3, 5, or 6, $25,000 or more, $7,500 or more.
    4 or 7, $20,000 or more, $5,000 or more.
    1 or 2, $17,500 or more, $5,000 or more.
    8 or 9, $12,500 or more, $3,750 or more.
  5. Search the return for Schedule R and take the following action when the previous (2) does not find a taxpayer error:

    If Schedule R is... And... Then...
    A] Attached or not attached, The credit amount is greater than the amount needed to offset tax and the taxpayer includes the amount in Total Tax and/or Balance Due/Refund, 1. GTSEC 04.
    2. Enter the computer amount in Field 0454C (Field 04320, Form 1040A).
    3. Adjust the entry in Field 0455 (Field 0436, Form 1040A) to reflect change.
    4. Assign TPNC 100 with the literal for TPNC 240 when EC 330 displays.
    The taxpayer did not use the credit, because the tax liability is zero, and computes total credits to zero, 1. Delete the amount in Field 04547C (Field 0432, Form 1040A).
    2. Delete the entry in Field 0455 (0436, Form 1040A) when EC 310 displays.
    Note: Do not assign a TPNC.
    B] Not attached, Filing Status Age indicator Code is determined to be 1 or 3,
    1. GTSEC 16.
    2. "Dummy in" Section 16.
    3. DLSEC 16 (If the computer's amount does not match the taxpayer).
    4. SSPND 211 for Schedule R if 3. applies (see note).

    Note:

    Do not correspond for Schedule R if the underprint for Field 0444, (Field 0428, Form 1040A) is not present. Delete the entry in Field 0454C (Field 0432, Form 1040A). Delete the entry in Field 0455 (0436, Form 1040A) if Error Code 310 displays.

    C] Attached, Taxpayer writes "CFE" to the left of line 54 of Form 1040 (line 32 of Form 1040A), 1. Verify entries.
    2. Assign TPNC 241.

3.12.3.81.12.4  (01-01-2015)
Field 1611, Taxable Disability Income (EC 282)

  1. Use the following table when line 11 is blank and box 2, 4, 5, 6, or 9 from Part I is checked:

    If taxpayer checked... Then...
    A] Box 2, 4, 5 or 9, Enter total amount of disability from Form 1040 in Field 1611.
    B] Box 6, 1. Add $5,000 to the total amount of disability from Form 1040.
    2. Enter total in Field 1611.
    C] Inconsistent boxes or you cannot determine the correct entries, SSPND 211 for clarification. Note: Do not correspond if the taxpayer will not qualify for the credit.

3.12.3.81.12.5  (01-01-2015)
Field 1613C, Other Pensions and Annuities (EC 282)

  1. Search the return or attachments for any non-taxable portion of pensions and/or Social Security when line 13c, Schedule R is blank and take the following action:

    If a non-taxable amount is... Then...
    A] Found (i.e., line 16a and/or 20a, Form 1040; line 12a and/or 14a, Form 1040A), 1. Adjust the entry in Field 1613C, as appropriate.
    2. Assign TPNC 240, or other appropriate TPNC, if EC 282 redisplays.
    B] Not found, SSPND 211.
    Note: Do not correspond for line 13c if the amount is a dash, zero or negative.

3.12.3.81.12.6  (01-01-2015)
Field 1620V, Credit for the Elderly or Disabled Verified (EC 282)

  1. Use this field to enter an amount for Credit for the Elderly or Disabled when the computer is unable to arrive at the correct amount.

3.12.3.81.12.7  (01-01-2015)
Correction Procedures (EC 582)

  1. Correct coding and transcription errors and misplaced entries in displayed fields.

  2. Refer to all instructions for EC 282 and also refer to IRM 3.12.3.5.9 for Non-Compute information.

  3. Enter C in the Clear field when there are no corrections to be made.

3.12.3.81.12.8  (01-01-2015)
Prior Year (EC 282)

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. TY11 to TY01. Personal credits are not limited by the Alternative Minimum Tax.

3.12.3.81.12.9  (01-01-2015)
Allowable Taxpayer Notice Codes (Form 1040 and Form 1040A) (EC 282)

  1. This table shows the allowable Taxpayer Notice Codes for Error Code 282.

    Note:

    The following Taxpayer Notice Codes are shown in a condensed format. The complete version of each is listed in the Taxpayer Notice Codes, Exhibit 3.12.3–2, in the back of the IRM.

  2. If you are processing a conversion-a return converted to Form 1040-you must assign TPNC 111 in addition to other applicable notice codes.

    Note:

    Always assign TPNC 111 first.

    TPNC Description
    100  
    111 Your return has been converted to a Form 1040.
    218 We computed your tax for you. (Form 1040/A)
    230 We found an error in the addition of your Alternative Minimum Tax to your Tentative Tax on page 2 of your return. (Form 1040)
    240 Computed or transferred Schedule R incorrectly. (Form 1040/A)
    241 We computed your Schedule R for you. (Form 1040/A)
    558 You gave us information that changed the amount of tax you owe. (Form 1040/A)
    565 No Reply, Schedule R. (Form 1040/A)
    *** Any previously assigned TPNC.

3.12.3.81.13  (01-01-2015)
Error Code 284 and 584, Education Credits (American Opportunity and Lifetime Learning Credit)

  1. Error Code 284/584 instructions follow.

3.12.3.81.13.1  (01-01-2015)
Fields Displayed, Form 1040 and Form 1040A (EC 284)

  1. The following fields are displayed

    1040 1040A Field name
    01TXP 01TXP Tax Period
    01FSC 01FSC Filing Status Code
    01RPC 01RPC Returns Processing Code
    01SPC 01SPC Special Processing Code
    01DSI 01DSI Dependent Status Indicator
    01EXC 01EXC Exemption Code Field
    01EXV 01EXV Exemption Code Verified (ERS input only)
    01PS 01PS Primary TIN
    01NA1> 01NA1> Primary NAP Access Indicator
    01SS 01SS Secondary TIN
    01NA2> 01NA2> Secondary NAP Access Indicator
    01DS1 01DS1 Dependent 1 TIN
    01NP1> 01NP1> Dependent 1 NAP Access Indicator
    01DS2 01DS2 Dependent 2 TIN
    01NP2> 01NP2> Dependent 2 NAP Access Indicator
    01DS3 01DS3 Dependent 3 TIN
    01NP3> 01NP3> Dependent 3 NAP Access Indicator
    01DS4 01DS4 Dependent 4 TIN
    01NP4> 01NP4> Dependent 4 NAP Access Indicator
    0337 0321 Adjusted Gross Income
    >>>> >>>> Adjusted Gross Income Computer
    0447> 0430> Income Tax before Credits
    0450 0433 Education Credit
    >>>> >>>> Education Credit Computer
    04GEC> 04GEC> Gross Education Credit Computer
    0450V 0433V Education Credit Verified (ERS input only)
    5001 5001 Tentative American Opportunity Credit Amount
    5010 5010 Lifetime Learning Credit Qualified Expenses Amount
    50AOS> 50AOS> American Opportunity Eligible Student Computer Number
    50AOV 50AOV American Opportunity Eligible Student Verified Number (ERS input only)
    50NC1 50NC1 Education Credit Student 1 Name Control
    50SS1 50SS1 Education Credit Student 1 TIN
    50FN1 50FN1 Education Institution Federal ID Number Student 1
    50SN1 50SN1 Second Education Institution Federal ID Number Student 1
    50PY1 50PY1 Prior-Year Hope Scholarship or AOT Credit Claimed Student Code 1
    50AE1 50AE1 Academic Eligibility Student 1 Code
    50PS1 50PS1 Post-Secondary Education Student 1 Code
    50FE1 50FE1 Felony Conviction Student 1 Code
    50NC2 50NC2 Education Credit Student 2 Name Control
    50SS2 50SS2 Education Credit Student 2 Name Control
    50FN2 50FN2 Education Institution Federal ID Number Student 2
    50SN2 50SN2 Second Education Institution Federal ID number Student 2
    50PY2 50PY2 Prior-Year Hope Scholarship or AOT Credit Claimed Student Code 2
    50AE2 50AE2 Academic Eligibility Student 2 Code
    50PS2 50PS2 Post-Secondary Education Student 2 Code
    50FE2 50FE2 Felony Conviction Student 2 Code
    50NC3 50NC3 Education Credit Student 3 Name Control
    50SS3 50SS3 Education Credit Student 3 SSN
    50FN3 50FN3 Education Institution Federal ID Number Student 3
    50SN3 50SN3 Second Education Institution Federal ID Number Student 3
    50PY3 50PY3 Prior-Year Hope Scholarship or AOT Credit Claimed Student Code 3
    50AE3 50AE3 Academic Eligibility Student 3 Code
    50PS3 50PS3 Post-Secondary Education Student 3 Code
    50FE3 50FE3 Felony Conviction Student 3 Code
    0568 0544 Refundable American Opportunity Credit
    >>>> >>>> Refundable American Opportunity Credit Computer
        Section XX Not Present

3.12.3.81.13.2  (01-01-2015)
Invalid Conditions (EC 284)

  1. Error Code 284 generates when

    1. education credit (Field 0449/0431) is not equal to education credit computer and

    2. the difference between education credit taxpayer and education credit computer is not within tolerance and

    3. a math error is present.

  2. Error Code 584 appears when

    1. a math error is not present and

    2. any allowable statutory credit is not within tolerance of its computer-generated amount.

3.12.3.81.13.3  (01-01-2015)
Correction Procedures (EC 284)

  1. Correct coding and transcription errors and misplaced entries in displayed fields. See IRM 3.12.3.40.4, Section 50, for the location of transcribed items in returns for prior years.

    Note:

    If Code and Edit X'd line 1 of Form 8863, refer to (8).

  2. Refer to all procedures before assigning a TPNC.

  3. TY12 and subsequent, taxpayers must use Form 8863. If the return is for TY12 and later, the Form 8863 is TY11 or before, SSPND 211 to request Form 8863 for TY12 and later as appropriate.

  4. If taxpayer filed more than one Form 8863 for the same student (e.g., different Education Institutions), use the fields only for that student (fields NC1, SS1, FN1, SN1, PY1, AE1, PS1 and FE1).

  5. Take the following actions if an amount is present in Field 0450 (Field 0433, Form 1040A) and Form 8863 is missing.

    If the taxpayer Then
    A] is not liable for tax on line 44 or line 27 of Form 1040A and didn’t claim the refundable credit on line 67 of Form 1040 or 43 of Form 1040A 1. Delete the entry in Field 0450 (Field 0433, Form 1040A).
    2. Remove the amount of education credit from Field 0455 if EC 310 generates.
    B] is liable for tax on line 44 of Form 1040 or line 28 of Form 1040A or claims the refundable credit on line 67 of Form 1040 or 43 of Form 1040A SSPND 211 to correspond for Form 8863.
  6. Use the information from page 1 of Form 1040 or Form 1040A, to perfect TINs and name controls in Section 50.

    Note:

    If the TIN in field 01PS doesn’t match the primary taxpayer’s TIN in section 50 and EC 004 or 005 didn’t appear earlier, auto-TIN may have corrected the TIN. Change the primary taxpayer’s TIN in section 50 to match the TIN in field 01PS. If the programming still doesn’t allow the credit for the primary taxpayer, enter R in field 02RI and transmit it.

  7. TY07 and later. Taxpayers may not take the Tuition and Fees Deduction and Education Credit for the same student. If the taxpayer takes the deduction and the credit, compare the student in Form 8917, section 60, with all students in Form 8863, section 50. If the same student appears in both forms, DLSEC 60 and assign TPNC 143.

  8. If education credits are limited or denied because of an invalid or missing dependent TIN take the following actions:

    1. If only one student enter "00" in Field 50AOV, or

    2. If more than one student claimed, and line 30, Form 8863 is $2,500 for each student, enter the number of eligible for AOC in Field 50AOV, or

    3. If more than one student claimed, and the amounts on line 30, Form 8863 are not $2,500 for each student, subtract the line 30 amount of the student who is missing or has an invalid TIN from line 1, Form 8863 and enter the total in Field 5001.

    4. If EC 284 redisplays, reassign TPNC 604 for the missing TIN or TPNC 605 for the invalid TIN.

  9. If RPC O, CCC X, or RPC E is present and primary or secondary taxpayer is one the students, follow these procedures.

    If And Then
    A] One of the students is the primary taxpayer RPC "O" is present, The primary taxpayer is ineligible for any education credit.
    1. American Opportunity Credit (AOC)

      1. a.Enter the number of students eligible for the AOC in Field 50AOV if line 30, Form 8863 for each student is $2,500. If not $2,500, subtract the primary taxpayer's line 30 amount from line 1, Form 8863. and enter the total in Field 5001. .

      2. Don’t include the primary taxpayer in the number of eligible students.

    2. Lifetime Learning Credit (LLC)
      Reduce the tentative credit in field 5010 by the primary taxpayer’s expenses reported in line 31 of his or her page 3 of Form 8863.

    3. 3.Assign TPNC 242.

    CCC "X" is present, The primary taxpayer is eligible for the education credit.
    1. American Opportunity Credit (AOC)

      1. Enter the number students eligible for the AOC in field AOV.

      2. Include the primary taxpayer in the number of eligible students.

    2. Lifetime Learning Credit (LLC)

      1. Make sure the primary taxpayer’s expenses in line 31 of his or her page 3 of Form 8863 are included in field 5010.

      2. Add the primary taxpayer’s expenses to the figure in field 5010 if they’re not already included there.

    B] One of the students is the secondary taxpayer RPC "E" is present, The secondary taxpayer is eligible for the education credit.
    1. American Opportunity Credit (AOC)

      1. Enter the number students eligible for the AOC in field AOV.

      2. Include the secondary taxpayer in the number of eligible students.

    2. Lifetime Learning Credit (LLC)

      1. Make sure the secondary taxpayer’s expenses in line 31 of his or her page 3 of Form 8863 are included in field 5010.

      2. Add the secondary taxpayer’s expenses to the figure in field 5010 if they’re not already included there.

      3. Manually compute the credit and enter the result in Field 0449V/0431V.

  10. If the programming doesn’t allow the education credit because the student is a primary or secondary taxpayer who did not claim a personal exemption or the number 1 is present in field 01DSI

    1. figure the nonrefundable Education Credit and

    2. enter the verified amount in Field 0450V of Form 1040 or 0433V of Form 1040A.

  11. If the taxpayer checked the box at line 7 of Form 8863 or states not eligible for the Refundable American Opportunity Credit, enter K in field 01SPC.

3.12.3.81.13.4  (01-01-2015)
Field 5001, Tentative American Opportunity Credit Amount (AOC) (EC 284)

  1. TY 12 and later, to be eligible for the AOC, students must answer question 23 to 26, and eligible students must answer the questions in the sequence noted here. Any other sequence makes the student ineligible for the AOC.

    Line Answer Field Value
    23 No 50PYX 2
    24 Yes 50AEX 1
    25 No 50PSX 2
    26 No 50FEX 2

    Note:

    The X in the field stands for the number 1, 2, or 3 in the field name-1 for student one, 2 for student two, 3 for student three.

  2. Correspond for Form 8863 in these situations.

    • The answers to question 23 to 26 make the taxpayer eligible for the AOC (2 in field 50PYX, 1 in field 50AEX, 2 in field 50PSX, 2 in field 50FEX) but line 1 is blank and cannot be perfected from entries on line 27 to 30.

      Caution:

      This student is eligible for the Lifetime Learning Credit (LLC) too. If the tentative credit for the student appears on line 10 of Form 8863 and the taxpayer figures the LLC, do not correspond. Do not allow the AOC for such students. If the figure in field 50AOS> includes such a student, subtract that student from the number of those eligible for the AOC and enter the result in field 50AOV.

    • The taxpayer doesn’t answer question 23, 24, 25, or 26 but enters the tentative AOC on line 1 or figures qualified expenses from line 27 to 30.

  3. Field 5001 shows the tentative credit the taxpayer figures on line 1 of Form 8863. It is limited to a maximum of $2,500 for each eligible student.

  4. The taxpayer submits a separate Part III of Form 8863 for each student and reports on line 1 of the summary Form 8863 the sum of the expenses on line 30 of Form 8863 for all students. The tentative credit is also the base of the refundable credit.

  5. Verify whether the expenses in field 5001 are equal to the sum of expenses reported on line 30 of Form 8863 for each eligible student. Correct the figure in field 5001 if the taxpayer misfigured the sum of the expenses. If line 30 is blank for a student accept the figure on line 1 for that student.

  6. Field 50AOS> shows the number of students eligible for the AOC. The programming uses it to determine the maximum allowable tentative credit on line 1 of Form 8863. To be included in field 50AOS>, students must have a valid TIN and answer question 23 to 26 appropriately.

    • The primary and secondary taxpayer may take the AOC for themselves and their dependents.

    • Taxpayers do not have to take a personal exemption for themselves but must take a dependent exemption for any student who is their dependent.

  7. When the taxpayer has entered less than $2,500 on line 30, Form 8863 for any student, Manual computation will be required. Recompute AOC and enter the amount in Field 0450V (0433V, Form 1040A)
    NOTE:If taxpayer has also computed Lifetime Learning Credit, add AOC and Lifetime Learning , enter the amount in Field 0450V (0433V, Form 1040).

  8. If the answers to question 23 to 26 make the student ineligible for the AOC, assign TPNC 243. Use the table below to determine the student's eligibility for the AOC from the answer to question 23 to 26. The sequence of answers and values in the table is the only one that makes a student eligible for the AOC. Any different sequence makes the student ineligible for the AOC.

    Line Answer Field Value
    23 No 50PYX 2
    24 Yes 50AEX 1
    25 No 50PSX 2
    26 No 50FEX 2

    Note:

    The X in the field stands for the number 1, 2, or 3 in the field name-1 for student one, 2 for student two, 3 for student three.

    Reminder:

    Students eligible for the AOC are eligible for the Lifetime Learning Credit too and may take it instead of the AOC. They report qualified expenses on line 31 and the tentative credit on line 10 of Form 8863. Do not allow the AOC for such students. If the figure in field 50AOS> includes such a student, subtract that student from the number of those eligible for the AOC and enter the result in field 50AOV.

  9. If the taxpayer claims the American Opportunity Credit for any student not among the four transcribed dependents on line 6c of Form 1040 or Form 1040A or takes the credit for more than the three students in section 50 and provides a Form 8863 or an attachment with the required information for those other students, take the following steps.

    1. Verify with command code INOLE the validity of each student's TIN.

    2. Enter the number of eligible students with a valid TIN for whom the taxpayer takes the AOC in field 50AOV. Do not include in that number any student with an invalid or missing TIN.

    3. If EC 284 reappears, assign TPNC 604 for any missing TIN and TPNC 605 for any invalid TIN.

      Caution:

      If all the students listed on Form 8863 have an invalid or missing TIN, do not figure the credit. Instead assign TPNC 604 or 605. Do not correspond because of a missing or invalid TIN.

  10. If the taxpayer doesn’t take the dependent exemption for a student, assign TPNC 242.

  11. Allow the nonrefundable education credit for the primary or secondary taxpayer who does not claim a personal exemption.

  12. If any student's name or TIN is missing and you haven't already assigned TPNC 604, assign TPNC 242.

  13. If an amount is present on line 1 of Form 8863 and the AGI is $180,000 for FSC 2, or more ($90,000 or more for FSC 1, 4, 5, or 7), assign TPNC 242.

  14. If the amount on line 1 of Form 8863 is greater than $2,500 multiplied by the number in Field 50AOS>, assign TPNC 243.

3.12.3.81.13.5  (01-01-2015)
Field 5010, Lifetime Learning Credit Qualified Expenses amount (EC 284)

  1. TY12 and later, students eligible for the Lifetime Learning Credit (LLC)

    1. answer with yes to question 23, 25, or 26 or no to question 25 and report the tentative credit on line 10 or

    2. answer with no to question 23, with yes to question 24, with no to question 25, and with no to question 26-2, 1, 2, 2-and report the tentative credit on line 10 or

      Note:

      The programming counts the eligible student in bullet b a qualifying child for the AOC. Subtract the student from the number of students eligible for the AOC and enter the result in field 50AOV.

    3. answer with no to question 23 and don’t answer question 24, 25, or 26 and report qualified expenses on line 31 or the tentative credit on line 10.

      Note:

      The programming allows the LLC when the taxpayer doesn’t answer any question from line 23 to 26 but enters a tentative credit on line 10. Allow the LLC in this case.

  2. TY12 and later, taxpayers must file a separate Part III of Form 8863 for each student and report on line 10 the sum of the qualified expenses for each student on line 31 of Form 8863.

  3. Field 5010 shows the tentative credit on line 10 of Form 8863.

  4. Verify whether the expenses in field 5010 are equal to the sum of expenses reported on line 31 of Form 8663 for each eligible student. Correct the figure in field 5010 if the taxpayer misfigured the sum of expenses.

  5. The allowable expenses reported on line 11 of Form 8863 are limited to the smaller of line 10 or $10,000, regardless of the number of eligible students.

  6. The tentative lifetime learning credit on line 12 of Form 8863 is derived from the figure on line 11 and is equal to 20 percent of the entry on line 11, which may not exceed $10,000.

  7. The maximum allowable Lifetime Learning Credit is $2,000, regardless of the number of students.

  8. If the taxpayer claims the Lifetime Learning Credit for any student not among the four transcribed dependents on line 6c of Form 1040 or Form 1040A or takes the credit for more than the three students on Form 8863 and provides a Form 8863 or an attachment with the required information for those other students, take the following steps.

    1. Verify with command code INOLE the validity of each student's TIN.

    2. Figure the sum of all students' qualified expenses and enter it in Field 5010.

    3. Manually recompute Form 8863 and enter the total from line 19, Form 8863 in Field 0450V.

  9. If a tentative credit appears on line 1 and 10 of Form 8863 for any one student and the taxpayer takes the sum of both credits for any one student, follow these steps.

    • TY12 and later, if the student is eligible for the AOC-that is, answers question 23 to 26 appropriately-allow the AOC. Remove the student's tentative credit from the figure in field 5010. Assign TPNC 243.

    • TY12 and later, if the student is ineligible for the AOC-that is, doesn't answer question 23 to 26 appropriately-allow the LLC. Remove the student's tentative credit from the figure in field 5001. Assign TPNC 243.

    Reminder:

    The American Opportunity Credit came into being in TY09. In TY08 and earlier The Hope Credit appeared in Part I of Form 8863 and the Lifetime Learning Credit in Part II. Taxpayers were still not allowed to take both credits for the same student. For TY08 and before allow the LLC for taxpayers who take the Hope Credit and Lifetime Learning Credit for the same student.

  10. If any student is not claimed as a dependent on the return, assign TPNC 242.

    Exception:

    Allow the nonrefundable education credit for the primary or secondary taxpayer who do not claim a personal exemption.

  11. If any student's name or TIN is missing, assign TPNC 242.

  12. If an amount is present on line 12 of Form 8863 and the AGI is equal to or greater than$128,000, ($127,000 for TY13, $124,000 for TY12) for FSC 2, equal to or greater than $64,000 ($63,000 for TY13, $62,000 for TY12) for FSC 1, 4, 5, or 7), assign TPNC 242

  13. If the taxpayer computed line 10 of Form 8863 incorrectly, assign TPNC 243.

3.12.3.81.13.6  (01-01-2015)
Field 0449 (Field 0431, Form 1040A), Education Credit (EC 284)

  1. This field represents the Education Credit claimed on line 50 of Form 1040 (line 33, Form 1040A).

  2. If FSC is 3 or 6 assign TPNC 242.

  3. If the taxpayer's amount on line 50, Form 1040 (line 33, Form 1040A) is within eight dollars of the underprint for Field 0449 (Field 0431, Form 1040A), enter the taxpayers' amount in Field 0450V, Form 1040 (Field 0433V, Form 1040A).

  4. If the underprint for a personal credit is more than the amount claimed by the taxpayer, compare line 47, Form 1040, to Field 0447>. If the taxpayer made an error adding lines 44, 45, and 46, assign TPNC 230.

  5. When the taxpayer claims a credit amount that is greater than the amount needed to offset tax and includes the amount in Total Tax (Field 0463 (Field 0439, Form 1040A)) and/or Balance Due/Refund Field, take the following actions:

    1. GTSEC 04.

    2. Enter the amount in Field 0447> in Field 0450 (Field 0430> in Field 0433, Form 1040A)..

    3. Adjust the entry in Field 0455 (Field 0436, Form 1040A) to reflect the change.

    4. Assign TPNC 243 when EC 334 generates.

  6. The taxpayer makes a math error in computing the total or transferring the total amount of Form 8863 to line 50, Form 1040 (line 33, Form 1040A), assign TPNC 243.

  7. Assign any previously assigned TPNC if a previous math error made a change to the credit available.

3.12.3.81.13.7  (01-01-2015)
Prior Year (EC 284)

  1. For TY11 and prior, the computer cannot correctly figure the education credit. Manually compute the education credit and enter the amount in Field 0450V (0433V, Form 1040A).

  2. AOC For TY11 and TY10, if a tentative credit appears on line 2 and 6 for different students, enter the number of eligible AOC students in Field 50AOV.

    Exception:

    If a tentative credit appears on line 2 and 6 for any one student and the taxpayer takes the sum of both credits for any one student, see 3.12.3.81.13.5 (9), before entering eligible AOC students in Field 50AOV.

  3. AOC For TY09 and TY08.Taxpayers claiming the Education Credit for a student who attended an educational institution in a Midwestern disaster area can claim up to $4,800 in qualified expenses in column c of Part II (Hope Credit) of Form 8863.

    1. If any qualified expense in Part II is greater than $2,400, compute the amount for each student from column 3(c) through 3(f) and then line 4, the tentative Hope Credit. Enter the amount you compute for line 4 into Field 5001.

      Note:

      Taxpayers who claim the Hope Credit (Part II) must claim the Hope Credit for all students when they claim it for one. Using column 1(c) to 1(f), figure the amount on line 2 of Form 8863 and add it to the amount figured above and enter that sum in Field 5001.

  4. Lifetime Learning For TY11 and TY10, if a tentative credit appears on line 2 and 6 for different students, enter the number of eligible AOC students in Field 50AOV.

    Exception:

    If a tentative credit appears on line 2 and 6 for any student and the taxpayer takes the sum of both credits for one student, see 3.12.3.81.13.5 (9) before entering eligible AOC students in Field 50AOV.

  5. Lifetime Learning For TY09 and TY08 . Taxpayers claiming the Lifetime Learning Credit for a student who attended an educational institution in a Midwestern disaster area can claim online 7b (line 5b for TY08),of Form 8863 the smaller of $10,000 or the qualified expenses included on line 6 (line 4 for TY08)

    Caution:

    If taxpayers have an amount on line 7a and 7b (lines 5a and 5b for TY08) of Form 8863, programming cannot correctly figure the Lifetime Learning Credit.

    1. If the taxpayer has an entry on line 7a and 7b (5a and 5b for TY08) of Form 8863, manually compute the amount for line 29 (line 17 for TY08) of Form 8863.

    2. Enter the manually computed amount in Field 0450V (0433V, Form 1040A).

    3. If an amount is present on Form 8863, line 7b (line 5b for TY08), enter S in Field 01SPC.

  6. For TY07-TY05 - Students who attend an eligible educational institution in the Gulf Coast Opportunity Zone may receive a larger Hope and/or Lifetime Learning Credit. Manually compute the education credit and enter the amount in Field 0450V (0433V, Form 1040A).

  7. Assign TPNC 242 if Education Credits are limited or disallowed because any of the following are present:

    1. The student(s) listed is not claimed as a dependent on the return.

      Note:

      Allow the Education Credit if the student listed on Form 8863 is the primary or secondary taxpayer and they did not claim an exemption for themselves or is a DSI 1.

    2. The name/SSN information is missing for the student(s) listed.

    3. The FSC is 3 or 6.

    4. The FSC is 2 and the AGI is $122.000 for TY11, $120,000 for TY10 and TY09, $116,000 for TY08, $$114,000 for TY07, $110,000 for TY06, $107,000 for TY05; $105,000 for TY04).

    5. The FSC is 1, 4, 5, or 7 and the AGI is $61,000 for TY11, $60,000 for TY10 and TY09, $58,000 for TY08, $57,000 for TY07, $55,000 for TY06, $53,000 for TY05; $52,000 for TY04).

  8. Assign TPNC 243 when any of the following apply:

    1. The taxpayer claims both the Hope Credit and Lifetime Learning Credit for the same student on Form 8863.

      Note:

      Delete the student's information from the transcribed fields in Part I or II, Form 8863, before assigning a TPNC.

    2. The taxpayer made an error computing the Total Education Credit (Credit claimed exceeds the $2,500 per student limitation for the Hope Credit and/or exceeds the smaller of either:
      1. 20% of line 5, Form 8863.
      2. $2,200 for TY07-TY06; $2,000 for TY05-TY04) for the Lifetime Learning Credit).

    3. The taxpayer makes a math error or transfers their amount incorrectly to line 50, Form 1040 (line 33, Form 1040A).

  9. For TY03 and prior enter the taxpayers' entry in Field 0450V/0433V.

3.12.3.81.13.8  (01-01-2015)
Correction Procedures (EC 584)

  1. Refer to all instructions for EC 284. Also refer to IRM 3.12.3.2.10.5 for Change in Statutory Credits information.

  2. Enter C in the Clear field after initiating the Letter 2719C or if there are no further corrections to be made

3.12.3.81.13.9  (01-01-2015)
Allowable Taxpayer Notice Codes (Form 1040 and Form 1040A) (EC 284)

  1. This table shows the allowable Taxpayer Notice Codes for Error Code 284.

    Note:

    The following Taxpayer Notice Codes are shown in a condensed format. The complete version of each is listed in the Taxpayer Notice Codes, Exhibit 3.12.3–2, in the back of the IRM.

  2. If you are processing a conversion-a return converted to Form 1040-you must assign TPNC 111 in addition to other applicable notice codes.

    Note:

    Always assign TPNC 111 first.

    TPNC Description
    100  
    111 Your return has been converted to a Form 1040.
    218 We computed your tax for you. (Form 1040/A)
    230 We found an error in the addition of your Alternative Minimum Tax to your Tentative Tax on page 2 of your return. (Form 1040)
    242 Disallowed/Adjusted Education Credit - missing or invalid SSN; FSC 3; not an exemption. (Form 1040/A)
    243 Incorrectly computed or transferred Education Credits on Form 8863. (Form 1040/A)
    256 We changed the amount of exemption claimed on page 2 of your return for your child who didn’t live with you. Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, or Form 2120, Multiple Support Declaration, or a copy of a divorce decree showing your right to claim an exemption was incomplete or not attached to your return. This change may effect your taxable income, tax, or any of the following credits:
    • Education Credit

    • Child Tax Credit or

    • Additional Child Tax Credit.

    Form 1040/A
    549 You cannot claim the credit for tax year prior to 1998. We adjusted your tax accordingly. (Form 1040/A)
    558 You gave us information that changed the amount of tax you owe. (Form 1040/A)
    568 No reply - Form 8863 either incomplete or not attached. (Form 1040/A)
    604 You failed to provide a SSN on Form 8863 for children and/or dependents. We disallowed your Education Credits accordingly. (Form 1040/A)
    605 You failed to provide a correct SSN for at least one of your dependents. We adjusted your Education Credits accordingly. (Invalid) (Form 1040/A)
    *** Any previously assigned TPNC

3.12.3.81.14  (01-01-2015)
Error Code 286, Reserved

  1. Reserved.

3.12.3.81.15  (01-01-2015)
Error Code 287, Reserved

  1. Reserved.

3.12.3.81.16  (01-01-2015)
Error Code 288/588 - Retirement Savings Contribution Credit

  1. Error Code 288/588 instructions follow.

3.12.3.81.16.1  (01-01-2015)
Fields Displayed Form 1040 and Form 1040A (EC 288)

  1. This table shows the fields displayed.

    1040 1040A Field name
    01TXP 01TXP Tax Period
    01FSC 01FSC Filing Status Code
    01PS 01PS Primary SSN
    01PYB> 01PYB> Primary Year of Birth
    02PAV 02PAV Primary Age Verified (ERS input only)
    01SS 01SS Secondary SSN
    01SYB> 01SYB> Secondary Year of Birth
    02SAV 02SAV Secondary Age Verified (ERS input only)
    0337 0321 Adjusted Gross Income
    >>>> >>>> Adjusted Gross Income Computer
    0444 0428 Tentative Tax
    >>>> >>>> Tentative Tax Computer
    0447> 0430> Income Tax Before Credits Computer
    5406A 5406A Primary Contribution
    5406B 5406B Secondary Contribution
    0451 0434 Retirement Savings Contributions Credit
    >>>> >>>> Retirement Savings Contributions Credit Computer
    0451V 0434V Retirement Savings Contributions Credit Verified (ERS input only)
    0455 0436 Total Statutory Credits
    >>>> 0436> Total Statutory Credits Computer
    0463 0439 Total Tax IMF
    0463> 0439> Total Tax Liability Computer
    >>>> >>>> Total Tax IMF Computer
        Section XX Not Present

3.12.3.81.16.2  (01-01-2015)
Invalid Conditions (EC 288)

  1. Error Code 288 generates for tax periods 200212 and later when:

    1. The difference between Retirement Savings Contributions amount and Retirement Savings Contributions Computer amount is not within tolerance.

    2. A math error is present.

    3. Total Tax Computer is not equal to Total Tax IMF Computer.

  2. Error Code 588 generates when a math error is not present and either of the following exist:

    1. The return is a Non-Compute.

    2. Any of the allowable carryover statutory credits is not within tolerance of their respective computer generated amount.

3.12.3.81.16.3  (01-01-2015)
Correction Procedures (EC 288)

  1. Correct coding and transcription errors and misplaced entries in displayed fields.

  2. Compare line 47 Form 1040 to field 0447> when the computer's underprint for a personal credit is more than the amount claimed by the taxpayer. If the taxpayer made an error adding lines 44, 45, and 46 assign TPNC 230.

  3. If the literal "Section 54 Not Present" displays when an entry is present in Field 0451 (Field 0434, 1040A) and Form 8880 is present, GTSEC 54 and enter all fields of data available.

  4. If Form 8880 is not attached to the return, SSPND 211 for Form 8880.

    Caution:

    Do not correspond if the taxpayer does not qualify for the credit according to the requirements listed in (5).

  5. If the computer has limited the Retirement Savings Contribution Credit to zero, assign TPNC 244 in any of the following conditions:

    1. The Filing Status Code is 2 and AGI Computer is greater than $60,000 ($59,000 for TY13, $57,500 for TY12).

    2. The Filing Status Code is 1, 3, 5, or 6 and AGI Computer is greater than $30,000 ($29,500 for TY 13, $28,750 for TY12).

    3. The Filing Status Code is 4 or 7 and AGI Computer is greater than $45,000 ($44,250 for TY13, $43,125 for TY12).

  6. If the computer has limited the Retirement Savings Contribution Credit to zero, assign TPNC 246 in any of the following conditions:

    1. The Filing Status Code is 2 and both taxpayers are under 18 years of age at the end of the tax year.

      Caution:

      If the taxpayers' age, Field 01PYB>/01SYB>, is displaying with all zeros because RPC E, RPC O, or CCC X are present, see instructions in (7).

    2. The Filing Status Code is other than 2 and the taxpayer is under 18 years of age at the end of the tax year.

  7. If the date of birth does not appear-because RPC E, RPC O,or CCC X is present or check digits were entered and date of birth is 00000000, for instance-research with CC INOLES for the date of birth. Use the following table to resolve this error.

    If research shows... Then...
    A] Both the primary and secondary taxpayers are 18 or over, Enter the Primary taxpayer's age Field 02PAV and/or the secondary taxpayer's age in Field 02SAV.
    B] Either the primary or secondary taxpayer is under 18
    or the date of birth is not available,
    1. Manually compute the age of the taxpayer that is over age 18.
    2. Enter the taxpayer's age in Field 02PAV and/or 02SAV.
    3. Assign TPNC 246.
  8. Assign TPNC 245 if the taxpayer qualifies for the credit but is claiming more than the maximum for their filing status as shown here:

    1. $2,000 maximum credit for FSC 2 or 6.

    2. $1,000 maximum for all other FSCs.

  9. If the taxpayer made an error computing or transferring the Retirement Savings Contribution Credit, assign TPNC 247.

    Note:

    A math error on Form 8880 may cause multiple error codes to be displayed. Ensure no other errors are present before reassigning the previous TPNC.

3.12.3.81.16.4  (01-01-2015)
Correction Procedures (EC 588)

  1. Correct coding and transcription errors and misplaced entries in displayed fields.

  2. Refer to correction procedures for EC 288 and IRM 3.12.3.5.5 for Non-Compute information.

  3. Enter C in the Clear field if there are no corrections to be made.

3.12.3.81.16.5  (01-01-2015)
Prior Year (EC 288)

  1. The computer cannot accurately compute the Retirement Savings Contribution Credit for TY11 and before. The computer will limit the Retirement Savings Contribution Credit to zero according to the FSC and AGI for TY12. Manually compute the Retirement Savings Contribution Credit and enter the result in the verified field when any of the following conditions exist:

    1. The Filing Status Code is 2 and AGI Computer is greater than $56, 500 for TY11, $55,000 for TY10 and TY09, $53,000 for TY08, $52,000 for TY07 and $50,000 for TY06 and prior.

    2. The Filing Status Code is 1, 3, 5, or 6 and AGI Computer is greater than $28,250 for TY11, $27,750 for TY10 and TY09, $26,500 for TY08, $26,000 for TY07 and $25,000 for TY06 and prior.

    3. The Filing Status Code is 4 or 7 and AGI Computer is greater than $42,375 for TY11, $41,625 for TY10 and TY09, $39,750 for TY08, $39,000 for TY07 and $37,500 for TY06 and prior.

    4. The Filing Status Code is 2 and both taxpayers are under 18 years of age at the end of the tax year.

    5. The Filing Status Code is other than 2 and the taxpayer is under 18 years of age at the end of the tax year.

  2. If the tax year is prior to 2002, assign TPNC 548.

3.12.3.81.16.6  (01-01-2015)
Allowable Taxpayer Notice Codes (Form 1040 and Form 1040A) (EC 288)

  1. This table shows the allowable Taxpayer Notice Codes for Error Code 288.

    Note:

    The following Taxpayer Notice Codes are shown in a condensed format. The complete version of each is listed in the Taxpayer Notice Codes, Exhibit 3.12.3–2, in the back of the IRM.

  2. If you are processing a conversion-a return converted to Form 1040-you must assign TPNC 111 in addition to other applicable notice codes.

    Note:

    Always assign TPNC 111 first.

    TPNC Description
    100  
    111 Your return has been converted to a Form 1040.
    218 We computed your tax for you. (Form 1040/A)
    230 We found an error in the addition of your Alternative Minimum Tax to your Tentative Tax on page 2 of your return. (Form 1040)
    244 We didn't allow amount claimed for Retirement Savings Contributions Credit; your Adjusted Gross Income exceeds the maximum amount allowed. (Form 1040/A)
    245 We adjusted your Retirement Savings Contributions Credit, you claimed more than the amount allowed based on your filing status. (Form 1040/A)
    246 We didn't allow all or part of amount claimed for Retirement Savings Contribution Credit. The credit was disallowed if taxpayer and/or spouse are not at least 18 years of age or we were unable to verify age. (Form 1040/A)
    247 Computed or transferred Form 8880 incorrectly. (Form 1040/A)
    548 We can't allow the Retirement Savings Contribution Credit for a tax year before 2002. We adjusted your return accordingly. (Form 1040)
    558 You gave us information that changed the amount of tax you owe. (Form 1040/A)
    569 No Reply, Form 8880. (Form 1040/A)
    *** Any previously assigned TPNC.

3.12.3.81.17  (01-01-2015)
Error Code 289, Child Tax Credit Verifications

  1. Error Code 289 instructions follow.

3.12.3.81.17.1  (01-01-2015)
Fields Displayed, Form 1040/1040A (EC 289)

  1. This table shows the fields displayed.

    1040 1040A Field name
    CL CL Clear Field
    01TXP 01TXP Tax Period
    01SPC 01SPC Special Processing Code
    01TCE> 01TCE> Total Children Eligible for Child Tax Credit Computer
    02CEV 02CEV Total Children Eligible for Child Tax Credit Verified
    01EXC 01EXC Exemption Codes
    01EXV 01EXV Exemption Code Verified
    01CT1 01CT1 Dependent 1 Child Tax Credit Indicator
    01CT2 01CT2 Dependent 2 Child Tax Credit Indicator
    01CT3 01CT3 Dependent 3 Child Tax Credit Indicator
    01CT4 01CT4 Dependent 4 Child Tax Credit Indicator
    0447> 0430> Income Tax before Credits
    0448   Foreign Tax Credit
    >>>>   Foreign Tax Credit Computer
    0449 0431 Child and Dependent Care Credit
    0449> 0431> Child and Dependent Care Credit
    0454C 0432 Credit for the Elderly
    0454C> 0432> Credit for the Elderly Computer
    0450 0433 Education Credit
    >>>> >>>> Education Credit Computer
    0451 0434 Retirement Savings Contribution Credit
    >>>> >>>> Retirement Savings Contribution Credit Computer
    0452 0435 Child Tax Credit Amount
    >>>> >>>> Child Tax Credit Computer Amount
    0452V 0433V Child Tax Credit Verified Amount
    0454   Form 3800, 8801, and Other Credits
    04MIC   Mortgage Interest Credit
    >>>>   Mortgage Interest Credit computer
    04ADC   Adoption Credit
    04ADC>   Adoption Credit Computer
    04DCH   DC Homebuyers Credit
    >>>>   DC Homebuyer Credit Computer
    04QED   Electric motor Vehicle Credit (Form 8936)
    04AMC   Alternative Motor Vehicle Credit (Form 8910)
    04QPE   Qualified Plug in Vehicle Credit (Form 8834)
    0453   Residential Energy Credit
    0567 0543 Additional Child Tax Credit
    >>>> >>>> Additional Child Tax Credit Computer
    0567V 0543V Additional Child Tax Credit Verified

3.12.3.81.17.2  (01-01-2015)
Invalid Conditions (EC 289)

  1. Error Code 289 generates when all of the following exist for TY02 and later:

    1. Total Children Eligible for Child Tax Credit and Additional Child Tax Credit are present.

    2. Field 0453 (Form 5695), Field 0454 (Form 3800, 8396, or 8839) or the DC First-Time Homebuyer Credit, from Form 8859, is present.

    3. Either the Child Tax Credit Verified (Field 0452V/0435V) is not present or the Additional Child Tax Credit Verified (Field 0565V/0539V) is not present.

    Note:

    In general credits are applied to tax as they appear on the tax form. The Child Tax Credit is the exception to that rule. It's applied to tax only after the credits that appear below it on the tax form. EC 289 is designed to detect credits that should be applied after the Child Tax Credit so that examiners may see to it that the Child Tax Credit is properly applied to tax.

3.12.3.81.17.3  (01-01-2015)
Correction Procedures (EC 289)

  1. Correct coding and transcription errors and misplaced entries in displayed fields.

  2. If dependents were disallowed in Field 01EXV:

    1. Check Fields 01CT1/2/3/4.

    2. If no dependents have a valid TIN, enter F in Field 01SPC.

    3. If there is a mix of valid and invalid TINS, refer the return to the Lead Tax Examiner for manual computation.

  3. TY14, if the taxpayers' figure for the Child Tax Credit or Additional Child Tax Credit is greater than zero and differs from the underprint for the credit, verify the Child Tax Credit or the Additional Child Tax Credit. Apply to tax the credits from the following forms before applying the Child Tax Credit:

    • line 48 of Form 1040, Form 1116, Foreign Tax Credit

    • line 49 of Form 1040, Form 2441, Child and Dependent Care Expenses

    • line 50 of Form 1040, Form 8863, Education Credit

    • line 51 of Form 1040, Form 8880, Credit for Qualified Retirement Savings Contributions

    • line 15 of Form 8910, Alternative Motor Vehicle Credit

    • line 23 of form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit

    • line 22 of Schedule R, Credit for the Elderly or the Disabled

    • line 9 of Form 8396, Mortgage Interest Credit

    • line 16 of Form 8839, Qualified Adoption Expenses

    • line 15, Part I of Form 5695, Residential Energy Credits

    • line 3 of Form 8859, District of Columbia, First-Time Homebuyer Credit


    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. When the amount for either credit is zero, enter F in Field 01SPC.

  5. If no corrections are necessary, enter C in the Clear Field.

3.12.3.81.17.4  (01-01-2015)
Prior Year (EC 289)

  1. TY12 and TY 13, if the taxpayers' figure for the Child Tax Credit or Additional Child Tax Credit is greater than zero and differs from the underprint for the credit, verify the Child Tax Credit or the Additional Child Tax Credit. Apply to tax the credits from the following forms before applying the Child Tax Credit:

    • line 47 of Form 1040, Form 1116, Foreign Tax Credit

    • line 48 of Form 1040, Form 2441, Child and Dependent Care Expenses

    • line 49 of Form 1040, Form 8863, Education Credit

    • line 50 of Form 1040, Form 8880, Credit for Qualified Retirement Savings Contributions

    • line 30, Part II of Form 5695, Residential Energy Credits (TY12, line 32)

    • line 23 of form 8834, Qualified Plug-In Electric and Electric Vehicle Credit

    • line 15 of Form 8910, Alternative Motor Vehicle Credit

    • line 23 of form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit

    • line 22 of Schedule R, Credit for the Elderly or the Disabled

    • line 9 of Form 8396, Mortgage Interest Credit

    • line 16 of Form 8839, Qualified Adoption Expenses (TY12, line 12)

    • line 15, Part I of Form 5695, Residential Energy Credits (TY12, line 17, Part I;)

    • line 3 of Form 8859, District of Columbia, First-Time Homebuyer Credit (line 9, TY12)


    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.12.3.81.18  (01-01-2015)
Error Code 290, Child Tax Credit

  1. Error Code 290 instructions follow.

3.12.3.81.18.1  (01-01-2015)
Fields Displayed, Form 1040 and Form 1040A (EC 290)

  1. This table shows the fields displayed.

    1040 1040A Field name
    01TXP 01TXP Tax Period
    01FSC 01FSC Filing Status Code
    01EXC 01EXC Exemption Code
    01EXV 01EXV Exemption Code Verified (ERS input only)
    01RPC 01RPC Returns Processing Code
    01SPC 01SPC Special Processing Code
    01ACD 01ACD Audit Code
    01TCE> 01TCE> Child Tax Credit Total Eligible Computer Number
    02CEV 02CEV Child Tax Credit Total Eligible Verified Number (ERS input only)
    02DTR 02DTR Dependent SSNS Not Required Code
    01CT1 01CT1 Child 1 Child Tax Credit Indicator
    01YB1> 01YB1> Child 1 Year of Birth
    01DS1 01DS1 Dependent 1 SSN
    01DN1 01DN1 Dependent 1 Name Control
    >>>> >>>> Dependent 1 NAP Name Control
    01NP1> 01NP1> Dependent 1 NAP Access Indicator
    01CT2 01CT2 Child 2 Child Tax Credit Indicator
    01YB2> 01YB2> Child 2 Year of Birth
    01DS2 01DS2 Dependent 2 SSN
    01DN2 01DN2 Dependent 2 Name Control
    >>>> >>>> Dependent 2 NAP Name Control
    01NP2> 01NP2> Dependent 2 NAP Access Indicator
    01CT3 01CT3 Child 3 Child Tax Credit Indicator
    01YB3> 01YB3> Child 3 Year of Birth
    01DS3 01DS3 Dependent 3 SSN
    01DN3 01DN3 Dependent 3 Name Control
    >>>> >>>> Dependent 3 NAP Name Control
    01NP3> 01NP3> Dependent 3 NAP Access Indicator
    01CT4 01CT4 Child 4 Child Tax Credit Indicator
    01YB4> 01YB4> Child 4 Year of Birth
    01DS4 01DS4 Dependent 4 SSN
    01DN4 01DN4 Dependent Name Control 4
    >>>> >>>> Dependent 4 NAP Name Control
    01NP4> 01NP4> Dependent 4 NAP Access Indicator
    0337 0321 Adjusted Gross Income
    >>>> >>>> Adjusted Gross Income Computer
    0444 0428 Tentative Tax
    >>>> >>>> Tentative Tax Computer
    04510 0434 Retirement Savings Contribution Credit
    0452 0435 Child Tax Credit
    >>>> >>>> Child Tax Credit Computer
    0452> 0435> Gross Child Tax Credit Computer
    0452V 0435V Child Tax Credit Verified (ERS input only)
    0453   Residential Energy Credit
    47A 47A Child Tax Credit Dependent 1 Presence Test Code
    47B 47B Child Tax Credit Dependent 2 Presence Test Code
    47C 47C Child Tax Credit Dependent 2 Presence Test Code
    47D 47D Child Tax Credit Dependent 4 Presence Test Code
    47AID 47AID Child Tax Credit Additional ITIN Dependents Indicator
    4704B 4704B Schedule 8812 Non-Taxable Combat Pay
    47EI> 47EI> Additional Child Tax Credit Earned Income Computer
    4707 4707 Total Social Security and Medicare Taxes
        Section XX Not Present

3.12.3.81.18.2  (01-01-2015)
Invalid Conditions (EC 290)

  1. Error Code 290 generates when all of the following exist:

    1. The difference between the taxpayer's amount, Field 0452 (Field 0435, Form 1040A), and the computer's amount for Child Tax Credit is not within tolerance.

    2. The taxpayer's amount and the computer amount for Total Tax do not agree.

    3. A math error is present.

3.12.3.81.18.3  (01-01-2015)
Correction Procedures (EC 290)

  1. Correct coding and transcription errors and misplaced entries in displayed fields.

  2. For TY04 and later, the Child Tax Credit is $1,000. To limit the Child Tax Credit to zero, enter one "1" in the verified field.

  3. For TY09 and later, the Child Tax Credit is allowed only for a child claimed as a dependent for whom an exemption is allowed.

  4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  6. If the child's date of birth is after 12/31/14, the child does not qualify the taxpayer for the Child Tax Credit or an exemption. Take the following actions:

    1. Adjust the entry in Field 01EXV to disallow the child's exemption. Enter a number, from zero to nine, in each of the eight positions.

    2. Enter the correct number of qualifying Child Tax Credit children in Field 02CEV.

    3. Assign TPNC 606.

  7. If the child's date of death is before 1/1/14, the child does not qualify the taxpayer for the Child Tax Credit or an exemption. Take the following actions:

    1. Adjust the entry in Field 01EXV to disallow the child's exemption (All 8 positions must be entered).

    2. Enter correct number of qualifying Child Tax Credit children in Field 02CEV.

    3. Assign TPNC 609.

  8. If the taxpayer indicates the child did not live at home because of a divorce or separation:

    1. Form 8332, Form 2120, or a copy of a divorce decree is attached and child meets the qualifying criteria, allow the exemption, Education Credit, Child Tax Credit and Additional Child Tax Credit, enter "A" in Field 01SPC.

      Note:

      Use Fields 01EXV and 02CEV when allowing or disallowing dependents.

    2. Form 8332, Form 2120, or a copy of a divorce decree is not attached, SSPND 211.

      Note:

      Do not correspond if all dependent's for whom the child tax credit is being claimed have missing or invalid SSNs.

    3. If there has been any previous correspondence to the taxpayer and Form 8332, Form 2120 or a copy of a divorce decree is not attached, refer to No-Reply procedures in Exhibit 3.12.3-1 under Exemption paragraph c.

3.12.3.81.18.4  (01-01-2015)
Field 01CT1, 01CT2, 01CT3, 01CT4, Child Tax Indicators (EC 290)

  1. The taxpayer will indicate the dependents qualifying for child tax credit by checking the boxes in the Exemptions area of the return in column 6c(4). Fields 01CT1/2/3/4 have the following values:

    1. 0 (zero): the box in column 6c(4) was not checked.

    2. 1: the box in column 6c(4) was checked.

  2. Verify that the first four boxes in line 6c, column (4) were coded or transcribed correctly.

  3. If the number of dependents exceeds four, search the return and attachments for a statement listing additional qualifying children. The statement must show the name and TIN of each child.

    1. Verify the TIN and age (under age 17) of each qualifying child not transcribed.

    2. Include these qualifying children in the total of qualifying children and enter that total in Field 02CEV.

      Caution:

      For TY09 and later, include in Field 02CEV only the number of children who are qualifying children for the Child Tax Credit and claimed as a dependent on line 6c of Form 1040/1040A for whom an exemption is allowed.

3.12.3.81.18.5  (01-01-2015)
Fields 01YB1>, 01YB2>, 01YB3>, 01YB4>, Dependent 1, 2, 3, 4 NAP Year of Birth (EC 290)

  1. The computer will use the NAP Year of Birth to generate the number of children eligible for Child Tax Credit in Field 01TCE>.

  2. If Field(s) 01YB1>/2/3/4 contain zeros/XXXX, this information is not available on the NAP. Research CC INOLE for the dependent's date of birth

  3. If research reveals the child is under age 17, then consider the child a qualifying child for the Child Tax Credit and enter the total number of qualifying children in Field 02CEV.

  4. If research reveals the child is age 17 or older, then consider the child not a qualifying child for the Child Tax Credit and enter the total number of qualifying children in Field 02CEV.

3.12.3.81.18.6  (01-01-2015)
Fields 01TCE> and 02CEV, Total Children Eligible for Child Tax Credit (EC 290)

  1. Field 01TCE> displays the number of qualifying children for the Child Tax Credit.

    Note:

    Field 01TCE> does not include: Children with an invalid TIN (NAP Access Indicators of 2 or 9), a missing TIN, or who do not meet the age requirement (under age 17).

  2. When not all the qualifying children are among the transcribed dependents, verify with CC INOLE whether the name control and TIN of the other children are valid and meet the under age 17 requirement. The additional children must be a qualifying child for the Child Tax Credit (i.e., a son, daughter or a descendent of either), stepchild, or eligible foster child.

    1. If all the additional children are qualifying children, enter the correct number of children in Field 02CEV.

      Caution:

      For TY09 and later, include in Field 02CEV only the number of children who are qualifying children for the Child Tax Credit and claimed as a dependent on line 6c of Form 1040/1040A for whom an exemption is allowed.

    2. If any of the additional children are not qualifying children for the dependent exemption, adjust the entry in Field 01EXV accordingly. All eight positions of Field 01EXV must have an entry. Do not include these children in the number of qualifying children for the Child Tax Credit. Enter the correct number of qualifying children in Field 02CEV and assign TPNC 605 if EC 252 displays.

    3. Enter 0 (zero) in the first position of Field 01EXV if the primary taxpayer was disallowed in EC 004 or 005. A 1 (one) in the first position of Field 01EXV overrides RPC O and DSI 1 and allows the exemption for the primary taxpayer.

  3. If the taxpayer checks the box in column 4 of line 6c of Form 1040 or Form 1040A only for dependents with an ITIN but doesn't attach Schedule 8812 and doesn't take the CTC or ACTC and the only dependents eligible for the CTC or ACTC are those with an ITIN, enter 00 in field 02CEV.

  4. If at EC 038 you determined that a child failed the substantial presence test and is ineligible for the Child Tax Credit, send TPNC 627. Send any other relevant notices for those dependent.

  5. Use the following table to correct the error code when any of the following conditions exist:

    1. Field 01TCE> is blank and the taxpayer computed the Child Tax Credit.

      Note:

      If Field 01TCE> is blank, the computer has determined that there are no qualifying children for Child Tax Credit.

    2. The taxpayer checked one or more of the boxes in column 6c(4) and Field 01TCE> differs from the taxpayer's amount of Child Tax Credit.

    3. Fields 01YB1>/2/3/4 contain zeros (this information is not available on NAP). The computer will use the NAP Year of Birth to generate the number of eligible dependents in Child Tax Credit, Field 01TCE>. Research CC INOLE for the dependent's date of birth.

    If Field 01TCE>... And... Then...
    A] Is blank and the dependent(s) do meet the age requirement, The taxpayer computed the credit, 1. Adjust Field 01CT1/2/3/4 to show the qualifying children among the dependents.
    2. Use Field 02CEV for qualifying children not transcribed.
    B] Is blank and the dependent(s) do not meet the age requirement, The taxpayer computed the credit, 1. Adjust Field 01CT1/2/3/4 in accordance with the taxpayer's intent.
    2. Adjust the entry in Field 02CEV for qualifying children not transcribed.
    3. Assign TPNC 251.
    C] Matches the number of boxes checked,   Assign TPNC 252.
    D] Does not match because the TIN is invalid; the NAP Indicator is 2 or 9, The dependent is the fifth or subsequent dependent claimed on line 6c, 1. Adjust the entry in Field 01EXV accordingly. All eight positions must be entered.
    2. Assign TPNC 605.
    NOTE: If EC 252 displays, assign TPNC 605.
    Is not the fifth or subsequent dependent on line 6c, Assign TPNC 605.
    E] Does not match because the TIN is missing.

    Note:

    See the exceptions below for missing SSNs.

    The dependent is the fifth or subsequent dependent claimed, 1. Adjust the entry in Field 01EXV accordingly. All eight positions must be entered.
    2. See the exceptions below before assigning TPNC 604.
    Is not the fifth or subsequent dependent claimed, See the exceptions below before assigning TPNC 604.
    Exceptions:
    • Allow the Child Tax Credit if the SSN is missing because of religious beliefs (Amish, Mennonite, or Form 4029).
    • Allow the Child Tax Credit when the child's SSN is missing and the child was born and died in the same or consecutive tax period. Reminder: Enter RPC I for children who do not have an SSN and were born in the tax period of the tax return and died in the same or consecutive tax period. Taxpayers must provide documentary support in the form of a copy of the birth certificate, death certificate, or hospital record.
    F] Is blank and upon research you can determine any of the dependent(s) do meet the age requirement, Any of the Fields 01YB1>/2/3/4 are blank or zeros, 1. Adjust the entry in Fields 01CT1/2/3/4 to include all qualifying dependents. Use Field 02CEV if there are more than 4 dependents
    2. Assign TPNC 251, if necessary.
  6. If the taxpayer claims an amount for the credit but fails to check the "qualifying child" indicator boxes on the front of the return indicating the dependent(s) that qualify for the Child Tax Credit, do the following:

    1. If NAP date of birth indicates that any dependent(s) were born in 1998 or later (1997 fpr TY13. 1996 for TY12), enter "1" as applicable in Fields 01CT1/2/3/4.

    2. If there are more than four eligible dependents research the additional dependents for eligibility and enter the total number of dependents eligible in Field 02CEV.

    3. Assign TPNC 251 if the taxpayer has no qualifying children.

  7. Assign TPNC 251 if any child the taxpayer designates as a qualifying child for the Child Tax Credit exceeds the age requirement.

  8. Assign TPNC 252 when the taxpayer has claimed an amount for Child Tax Credit that cannot be reconciled with the dependent information on the return or attachments. Do not adjust the entry in Fields 01CT1/2/3/4.

  9. Assign TPNC 252 when the taxpayer computed Child Tax Credit (Field 0452/0435) incorrectly because modified Adjusted Gross Income (AGI) is greater than or equal to the following limits at which the credit begins to phase out:

    • $55,000 if FSC 3 or 6

    • $75,000 if FSC 1,4,5 or 7

    • $110,000 if FSC 2

  10. If the taxpayer checks the boxes on line 6c column 4 of Form 1040/1040A indicating they have qualifying dependents for Child Tax Credit, but failed to claim the credit, assign TPNC 252.

  11. If it appears the taxpayer is claiming all or part of the Child Tax Credit on the Additional Child Tax Credit line, assign TPNC 252.

    Note:

    If the taxpayer should have claimed the Child Tax Credit, the computer will compute the Child Tax Credit and reduce the Additional Child Tax Credit.

  12. Assign any previously assigned TPNC if a previous math error made a change to the credit available.

3.12.3.81.18.7  (01-01-2015)
Field 0451V/0433V, Child Tax Credit Verified (EC 290)

  1. Field 0452V (0435V, Form 1040A) is used by tax examiners to enter an amount for Child Tax Credit when the computer is unable to arrive at the correct amount. See Error Code 289 instructions.

3.12.3.81.18.8  (01-01-2015)
Prior Year (EC 290)

  1. For TY11 to TY04.The maximum amount allowed to claim for Child Tax Credit/Additional Child Tax Credit is $1,000 for each qualifying child under the age 17. The computer will compute Child Tax Credit using the amount for TY12. Manually compute Child Tax Credit and enter the result in Field 0452V (Field 0435V, Form 1040A),

  2. If the taxpayer claims an amount for the credit but fails to check the "qualifying child" indicator boxes on the front of the return indicating the dependent(s) that qualify for the Child Tax Credit, do the following:

    1. If NAP date of birth indicates that any dependent(s) were born in 1995 for TY11; 1994 for TY10; 1993 for TY09; 1992 for TY08; 1991 for TY07; 1990 for TY06; 1989 for TY05; 1988 for TY04, enter the total number of dependents eligible in Field 02CEV.

    2. If there are more than four eligible dependents research the additional dependents for eligibility and enter the total number of dependents eligible in Field 02CEV.

  3. For TY08 to TY05, taxpayers may claim the Child Tax Credit for qualifying children not claimed as dependents by filing Form 8901, Information on Qualifying Children Who Are Not Dependents, with their return. Form 8901 is not transcribed, so NAP validation is not performed for the children listed on Form 8901. Search the return for Form 8901 and research with CC INOLE to verify that the Name Control/TIN are valid and the child is under age 17. Enter the total number of qualifying children in Field 02CEV.

    Note:

    Form 8901 became obsolete at the end of TY08. From TY09 on, it is not a valid form. If Form 8901 is not attached, do not correspond.

3.12.3.81.18.9  (01-01-2015)
Allowable Taxpayer Notice Codes (Form 1040 and Form 1040A) (EC 290)

  1. This table shows the allowable Taxpayer Notice Codes for Error Code 290.

    Note:

    The following Taxpayer Notice Codes are shown in a condensed format. The complete version of each is listed in the Taxpayer Notice Codes, Exhibit 3.12.3–2, in the back of the IRM.

  2. If you are processing a conversion-a return converted to Form 1040-you must assign TPNC 111 in addition to other applicable notice codes.

    Note:

    Always assign TPNC 111 first.

    TPNC Description
    100  
    111 Your return has been converted to a Form 1040.
    163 We changed the amount claimed as child tax credit of your return because Schedule 8812, Child Tax Credit was required but incomplete or not attached to your tax return. (Form 1040/A) For TY12 and later.)
    218 We computed the tax for you. (Form 1040/A)
    230 We found an error in the addition of your Alternative Minimum Tax to your Tentative Tax on page 2 of your return. (Form 1040)
    231 We didn't allow part or all the amount claimed as foreign tax credit on your return. foreign tax credit is limited to the total amount of your tentative minimum tax liability. (Form 1040)
    251 We reduced or removed the Child Tax Credit and/or additional Child Tax Credit you claimed because one or more of your children exceeds the age limitation. (Form 1040/A)
    252 You incorrectly figured your Child Tax Credit. (Form 1040/A)
    558 You gave us information that changed the amount of tax you owe. (Form 1040/A)
    598 We changed the amount of exemption claimed for your child that didn’t live with you. Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents, or Form 2120, Multiple Support Declaration, or a copy of a divorce decree was incomplete or not attached to your tax return. This change may affect your taxable income, tax, or any of the following credits: • Education Credit • Child Tax Credit or • Additional Child Tax Credit.
    604 Missing SSN, disallowed child tax credit and exemption. (Form 1040/A)
    605 Invalid SSN; disallowed child tax credit and exemption. (Form 1040/A)
    606 We did not allow the exemption claimed for any dependent born after December 31 of the tax year of the return you filed.
    This change may affect your taxable income, tax, or any of the following credits:
    • Credit for Child & Dependent Care Expenses

    • Child Tax Credit

    • Additional Child Tax Credit

    (1040/A/EZ)
    607 Primary taxpayer deceased prior to the tax period. Exemption disallowed. (Form 1040/A)
    608 Secondary taxpayer deceased prior to the tax period. Exemption disallowed. (Form 1040/A)
    609 We did not allow the exemption claimed for any dependent deceased prior to the tax period of the return. (Form 1040/A)
    625 We changed the amount claimed as Child Tax Credit and/or Additional Child Tax Credit, on page 2 of your tax return because Schedule 8812, Child Tax Credit was required but incomplete or not attached to your tax return. (Form 1040) (For TY12 and later.)
    626 Your incorrectly figured your Child Tax Credit (Form 1040/A). (For TY12 and later.)
    627 We did not allow part or all of the amount claimed for Child Tax Credit on page 2 of your tax return because your dependent(s) with an Individual Taxpayer Identification Number (ITIN) did not meet the substantial presence test in Part I of your Schedule 8812, Child Tax Credit. (Form 1040) (For TY12 and later.)
    628 We changed the amount for Child Tax Credit an/or Additional Child Tax Credit because there was an error on Schedule 8812. The error was in:
    • computation of Schedule 8812

    • transfer of the amount to page 2 of your return and/or

    • Schedule 8812 was missing or incomplete.

    (Form 1040)
    780 We didn't allow the Child Tax Credit or Additional Child Tax Credit for any dependent who did not meet the substantial presence test. (Form 1040) (For TY12 and later.)
    *** Any previously assigned TPNC

3.12.3.81.19  (01-01-2015)
Error Code 291 and 591, Residential Energy Credit

  1. Error Code 291/591 instructions follow.

3.12.3.81.19.1  (01-01-2015)
Fields Displayed, Form 1040 (EC 291)

  1. This table shows the fields displayed.

    1040 Field name
    01TXP Tax Period
    01FSC Filing Status Code
    01SPC Special Processing Code
    0337 Adjusted Gross Income
    >>>> Adjusted Gross Income Computer
    0444 Tentative Tax
    >>>> Tentative Tax Computer
    0447> Income Tax Before Credits
    0453 Residential Energy Credit
    >>>> Residential Energy Credit Computer
    0455 Total Statutory Credits
    >>>> Total Statutory Credits Computer
    0463 Total Tax IMF
    0463> Total Tax Liability Computer
    >>>> Total Tax IMF Computer

3.12.3.81.19.2  (01-01-2015)
Invalid Conditions (EC 291 and 591)

  1. Error Code 291 generates when the following exist:

    1. When Residential Energy Credit does not equal Residential Energy Credit Computer amount.

    2. A math error is present and Total Tax Liability is not equal to Total tax Computer.

  2. Error Code 591 generates when the following exist:

    1. When Residential Energy Credit does not equal Residential Energy Credit Computer amount.

    2. A math error is not present and any of the allowable carryover statutory credits are not within tolerance of their respective computer generated amount.

3.12.3.81.19.3  (01-01-2015)
Correction Procedures (EC 291)

  1. Correct coding and transcription errors and misplaced entries in displayed fields.

  2. Compare line 47, Form 1040, to Field 0447> when the computer's underprint for a personal credit is more than the amount claimed by the taxpayer. If the taxpayer made an error adding lines 44, 45, and 46, assign TPNC 230.

  3. Form 5695 for TY 14 is a one page form, for Residential Energy Efficient Property Credit a credit limited to tentative tax after subtraction of any credits listed on line 14, Form 5695, The allowable credit is entered on line 15, Form 5695.

  4. Form 5695 for TY13

    • In Part I is the Residential Energy-Efficient Property Credit, a business credit limited to tentative tax after subtraction of any credits listed on line 14, Form 5695. Taxpayer enter the credit on line 15 of Form 5695.

    • In Part II is the Nonbusiness Energy Property Credit, a personal credit limited to $500. Taxpayers enter the credit on line 30 of Form 5695.

      Note:

      Married taxpayers who file a joint return and who each have an eligible property may claim a Residential Energy Credit up to $500 for each eligible property. The taxpayers must complete a separate Form 5695 for each property. On one of the forms they cross out the $500 on line 9 and replace it with $1,000 and note to the left of line 25 "More than one main home." For these taxpayers allow up to $1,000 on line 30 of Form 5695, but not more than $500 from any one Form 5695.

  5. Form 5695 for TY12

    • In Part I is the Residential Energy-Efficient Property Credit, a business credit limited to tentative tax after subtraction of any credits listed at line 15 of Form 5695. Taxpayers enter the credit on line 17 of Form 5695.

    • In Part II is the Nonbusiness Energy Property Credit, a personal credit limited to $500. Taxpayers enter the credit on line 32 of Form 5695.

      Note:

      Married taxpayers who file a joint return and who each have an eligible property may claim a Residential Energy Credit up to $500 for each eligible property. The taxpayers must complete a separate Form 5695 for each property. On one of the forms they cross out the $500 on line 9 and replace it with $1,000 and note to the left of line 27 "More than one main home." For these taxpayers allow up to $1,000 on line 32 of Form 5695, but not more than $500 from any one Form 5695.

  6. Use the following table when the taxpayer has claimed the Residential Energy Credit on Form 1040, line 53.

    If And Then
    A] Form 5695 is not attached Field 0447> is not blank, SSPND 211 to correspond.
    Field 047> is blank
    1. Do not correspond for Form 5695.

    2. Delete the credit from field 0453.

    3. If EC 310 appears, assign TPNC 572.

    B] the taxpayer claims a credit greater than the tax includes the amount in total tax or balance due/refund,
    1. GTSEC 04.

    2. Enter the underprint for field 0453 in field 0453.

    3. Adjust the entry in Field 0455 in keeping with the adjustment of field 0453.

    4. Assign TPNC 572.

    C] the taxpayer claims the Residential Energy Credit for a tax year before 2006   assign TPNC 571.
  7. The return is for TY13 and TY12; Form 5695 is present; and the credit in field 0453 is greater than $500.

    Reminder:

    Joint returns may have two Forms 5695. Married taxpayers who file a joint return and who each have an eligible property may claim a Residential Energy Credit up to $500 for each eligible property. The taxpayers must complete a separate Form 5695 for each property.

    If And Then
    A] line 32 of Form 5695 is greater than $500
    1. Page 1 of Form 5695 is blank or

    2. Line 14 or 15 for TY13 (line 16 or 17 for TY12) of Form 5695 is blank or zero

    assign TPNC 100 with this text.
    The Residential Energy Credit in Part II of Form 5695 is limited to $500 for an eligible property. You claimed more than the allowable amount of credit in Part II of Form 5695.
    B]
    1. line 30 for TY13 (line 32 for TY12) of Form 5695 is $500 or less and an amount is claimed on line 15 for TY13 (line 17 for TY12) of Form 5695 or

    2. the FSC is 2 and two Forms 5695 are attached and the amount on line 30 for TY13 (line 32 for TY12) of each form is $500 or less

    the sum of line 30 and 15 for TY13 (line 32 and 17 for TY12) is equal to the credit in field 0452 enter SPC C.
    the sum of line 30 and 15 for TY13 (line 32 and 17 for TY12) isn't equal to the credit in field 0452
    1. Enter the correct sum of line 30 and 15 for TY13 (line 32 and 17 for TY12) of Form 5695 in Field 0452.

    2. Enter SPC C.

    Reminder:

    If the FSC is 2 and a Form 5695 for each taxpayer is present, enter the sum of line 30 and 15 for TY13 (line 32 and 17 for TY12) from each taxpayer's Form 5695 in field 0452.

    C]
    l
    1. line 30 for TY13 (line 32 for TY12)of Form 5695 is greater than $500 and an amount is claimed on line 15 for TY13 (line 17 for TY12)or

    2. FSC is 2 and two Forms 5695 are attached and the amount on line 30 for TY13 (line 32 for TY12) of any Form 5695 is greater than $500

     
    1. Add the amount on lines 30 (up to $500) and 15 for TY13 (lines 32 (up to $500) and 17 for TY12) of Form 5695. NOTE: For FSC 2 with two Forms 5695, limit the credit on line 30 for TY13 (line 32 for TY12) of each Form 5695

    2. Enter the sum in Field 0452

    3. Enter SPC C

    4. Assign TPNC 100 with this text:
      The Residential Energy Credit in Part II of Form 5695 is limited to $500 for an eligible property. You claimed more than the allowable amount of credit in Part II of Form 5695.

    Reminder:

    If the FSC is 2 and two Forms 5695 are attached, limit the credit for each taxpayer to $500 and the combined non-business credit to $1,000.


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