IRS issues warning on costly tax credit errors that could cost you $5,000
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Some mistakes come with a small price. Others could cost you up to $5,000.
The IRS is sounding the alarm on a common filing error impacting American taxpayers.
If you're not careful, a simple oversight could delay—or completely derail—your refund.
And in some cases, it could mean giving up money you're legally owed.
Each year, millions of Americans file their taxes expecting credits to ease their financial burden.
But tax credits aren’t automatic—you must qualify, and even then, claim them properly.
The IRS says too many filers are either skipping key steps or submitting incorrect info.
That mistake could leave thousands on the table—or worse, trigger a flag on your return.
One major area of confusion? The Child Tax Credit (CTC) and the Additional Child Tax Credit (ACTC).
These credits can lower your tax bill by up to $2,000 per child under age 17.
If your liability is low, the ACTC offers up to $1,700 back in a refundable credit.
But filing errors or missing details could disqualify your claim completely.
Also read: Americans to receive around $3,000 IRS refunds in June—Here’s when and why yours may be late
The IRS stresses that eligibility rules must be followed exactly.
Your child must have a valid Social Security number before the return is submitted.
They must have lived with you for more than six months and be listed as your dependent.
Even one missing requirement can make the credit invalid.
Also read: IRS employee’s data access request raises concerns over taxpayer privacy
Income limits also apply to these credits, especially for higher earners.
The CTC begins to phase out at $200,000 for single filers or $400,000 for joint filers.
Once past that threshold, the benefit gradually decreases until it disappears.
The IRS will not issue ACTC refunds until mid-February, adding to possible delays.
To avoid problems, the IRS recommends using certified tax software or a professional preparer.
Mistakes, even small ones, can delay processing or lead to lost refunds entirely.
Double-check birthdates, SSNs, income, and residency status before filing.
It’s the best way to ensure you’re getting everything you deserve—and nothing gets flagged.
Read next: IRS warns Americans to secure their finances before disaster season heats up
Have you ever missed a tax credit or caught an error before filing? Share your experience or questions in the comments—we’d love to hear how you handle tax season.
The IRS is sounding the alarm on a common filing error impacting American taxpayers.
If you're not careful, a simple oversight could delay—or completely derail—your refund.
And in some cases, it could mean giving up money you're legally owed.
Each year, millions of Americans file their taxes expecting credits to ease their financial burden.
But tax credits aren’t automatic—you must qualify, and even then, claim them properly.
The IRS says too many filers are either skipping key steps or submitting incorrect info.
That mistake could leave thousands on the table—or worse, trigger a flag on your return.
IRS issues warning on costly tax credit errors that could cost you $5,000. Image source: Sean Lee / Unsplash
One major area of confusion? The Child Tax Credit (CTC) and the Additional Child Tax Credit (ACTC).
These credits can lower your tax bill by up to $2,000 per child under age 17.
If your liability is low, the ACTC offers up to $1,700 back in a refundable credit.
But filing errors or missing details could disqualify your claim completely.
Also read: Americans to receive around $3,000 IRS refunds in June—Here’s when and why yours may be late
The IRS stresses that eligibility rules must be followed exactly.
Your child must have a valid Social Security number before the return is submitted.
They must have lived with you for more than six months and be listed as your dependent.
Even one missing requirement can make the credit invalid.
Also read: IRS employee’s data access request raises concerns over taxpayer privacy
Income limits also apply to these credits, especially for higher earners.
The CTC begins to phase out at $200,000 for single filers or $400,000 for joint filers.
Once past that threshold, the benefit gradually decreases until it disappears.
The IRS will not issue ACTC refunds until mid-February, adding to possible delays.
To avoid problems, the IRS recommends using certified tax software or a professional preparer.
Mistakes, even small ones, can delay processing or lead to lost refunds entirely.
Double-check birthdates, SSNs, income, and residency status before filing.
It’s the best way to ensure you’re getting everything you deserve—and nothing gets flagged.
Read next: IRS warns Americans to secure their finances before disaster season heats up
