TL;DR
Meaning: A CP09 notice means that the IRS thinks that you may qualify for the Earned Income Credit (EIC). Don’t worry; this notice isn’t a bad one. On the contrary, this is the IRS watching over you in a good way by offering you an opportunity to receive some tax credit.
Next Step: Read the notice carefully, check if you meet the EIC criteria, and complete the enclosed worksheet if you believe that you qualify for the EIC.
What to Do: If you believe that you qualify for the EIC, complete the worksheet that accompanies the notice. Once complete, mail it back to the IRS to be considered for the credit.
You May Qualify for the Earned Income Credit (EIC)
If you received a CP09 notice, don’t panic; this is not a penalty or bad news. This notice is here to let you know that you may be qualified for the earned income credit. This is part of the IRS’s effort to ensure that taxpayers who qualify don’t miss out on the potential benefit.
Let’s break it down for you and help you understand what you need to know to do next.
What is a CP09 Notice?
A CP09 notice is a message from the IRS that lets you know that you may qualify for the Earned Income Credit (EIC) based on your tax return. This credit is for taxpayers who work and earn low to moderate income. The credit can be worth up to thousands of dollars, depending on your income and other factors.
Common Reasons for Receiving a CP09 Notice
Similar to other notices, it is important to understand why you received this notice and what to do in the next steps.
Not a Definite; an Invitation
While the thought of receiving some extra money through the IRS can seem like a dream come true, understand that this notice is not guaranteed with every person who receives it. Rather, this is an invitation for individuals who may be under certain qualifications. Still, if you received the notice, it doesn’t hurt to mail it back and see if your situation was approved.
Review the EIC Eligibility
For more information regarding the qualifications for the EIC, review the EIC requirements that the IRS has listed in the notice. Some of the qualifications include.
Read the Entire Notice Carefully
The notice should present you with an estimate of how much you might receive if you qualify. Additionally, the notice explains why you received the letter and how to complete and mail the completed form. Your response should be within 30 days to ensure that you do receive your earned income credit.
Understanding the CP09 Notice
Page 1: CP09 Notice Overview
Header: On the top portion of the notice, you should be presented with the IRS logo. To the right of that is the notice, tax year, social security number, and a contact number for more help
Why We’re Writing to You: The small section below your taxpayer information provides you with a brief overview of the refund amount that you could receive. Below, your refund amount is also the reason as to why the IRS records show that you may qualify for the earned income credit.
What You Need to Do: This section will give you instructions to look over the worksheet on page 3. It asks you to look over the requirements and confirm that you are eligible to receive the earned income credit. If so, then the next step is to complete and mail the worksheet found on page 3. If the requirements do apply to you, then the notice advises you to not mail anything.
Page 2: Additional Information
Next Steps: This section provides more details to those who are eligible for the earned income credit. The IRS will send out a refund check in 6-8 weeks as long as you don’t owe any tax or other debts that the IRS is required to collect. The IRS also notes that they will be sending a letter of explanation to those who sent the letter but were denied the credit. Lastly, the IRS provides instruction during next year’s 1040 Form.
Additional Information: This page offers references to the IRS website and their contact number. It also emphasizes keeping this notice for your records.
Page 3: Earned Income Credit Worksheet
Here you will find steps 1 and 2 of the earned income credit worksheet.
Step 1: Here you will find the eligibility requirements for the EIC. The worksheet will ask you to check all or any of the statements that either describe you or, if filed jointly, describe your spouse. For those who checked any of the boxes, unfortunately you are not eligible for the EIC. However, if you checked none of the boxes, then the form asks you to move on to step 2.
Step 2: This step requires you to provide information regarding no more than three of your dependents who lived with you or your spouse and are related to you or your spouse. Additionally, your qualifying child must have a valid Social Security number. The only exception is if your child was born and died in the same tax year. If so, then you must attach a copy of the child’s birth certificate or hospital records.
Page 4: Steps Continued
Step 2 (Continued): This is where you will need to fill out the necessary information for your 3 dependents. The information that is requested is
Simply fill out and check the necessary boxes that describe the dependents individually.
Step 3: After filling out the necessary info from step 2, step 3 will ask if you answered no to any of the questions provided in step 2. If you answered no to any of the questions, then the dependent does not meet the requirements. If you answered yes to all of the questions in step 2, then your dependent does meet the requirement. Then it asks to write how many dependents met the requirements.
If one or more of the dependents meet the requirements, then you may move on to step 4. If none of your dependents meet the requirements from step 2, then you are not eligible for the credit.
Page 5: Final Step
Step 4: After confirming that one or more of your dependents is eligible, step 4 will ask you to sign and provide the date of completion.
In Summary
Unlike other IRS notices, CP09 is not anything to get worked up about. This is an invitation for you to receive a refund based on certain requirements. If you meet the requirements, then you are able to sign the form and mail it to receive your check within 6-8 weeks. If you are still unsure on how to proceed with the notice, get in touch with our tax consultant who can offer advice on the next steps. Our team at LedgerFi is ready to help out!