CP09 Notice: Possible Unclaimed Earned Income Credit Refund

IRS Notice CP09 notifies you that you may be entitled to claim a refundable Earned Income Tax Credit on your previously filed tax return. You’ll need to fill out the worksheet enclosed with the notice to verify your eligibility.

Is the IRS really trying to give me money?

Yes. The IRS’s job is to ensure that every taxpayer files their income taxes accurately. The Earned Income Credit is part of the tax code, so the IRS wants to make sure you claim it if you’re eligible.

If you paid your taxes in full without taking the EITC, you paid too much and can get a refund check.

Did I do something wrong on my tax return?

A Notice CP09 will almost never lead to penalties unless there was something else wrong on your return. You didn’t do anything wrong in the sense that you need to worry about what the IRS will do.

But you may have paid too much and be entitled to a bigger tax refund.

You may want to ask your tax preparer how they missed this common credit or get help next year if you prepared your taxes yourself.

How do I respond to Notice CP09 using Form 15111?

The IRS includes a Form 15111 Earned Income Credit Worksheet with each CP09 notice. You can view a sample Form 15111 worksheet on the IRS website. Sometimes, the same worksheet may be included as part of your CP09 notice and not have the Form 15111 header on it.

All you need to do with your worksheet is check the boxes and provide information about your dependents, if any. The IRS will take care of the math for you.

Some of the questions in Step 1 of the worksheet can be tricky. For example, it asks if you had a principal place of abode in the United States for 6 months or less. The keywords are “or less.” If you lived in the United States for longer, you don’t check this box.

If you find any of the questions confusing, review the requirements for the Earned Income Tax Credit (below). If you qualify, you shouldn’t be checking any boxes in Step 1.

You do not need to file an amended return unless you discovered another mistake.

If you’re not sure whether you received a real IRS notice, check that the address it says to return it to is listed on the IRS website.

Am I guaranteed to get the Earned Income Credit?

The IRS sends a notice asking for more information instead of just giving you a refund for a reason. Whether you qualify for the Earned Income Tax Credit will depend on your entire filing situation. What the IRS is saying is that based on the information it has, you may qualify for the credit.

In order to qualify, you must meet the following eligibility rules.

• Have a valid Social Security Number.
• If you’re married or have children, your spouse and children must have valid Social Security Numbers.
• Have earned income. Earned income includes wages, salaries, tips, business income, side gig income, and union strike benefits. Earned income does not include Social Security benefits, unemployment benefits, investment income, or alimony.
• Have less than $10,000 of investment income for the tax year. This includes things like income from stock dividends and capital gains.
• Have an Adjusted Gross Income under the limit. The maximum income level depends on your filing status and number of dependents.

You can use this IRS tool to determine if you qualify. 

What is the unemployment exclusion?

If your AGI is too high, you won’t qualify for the Earned Income Credit. However, the unemployment income exclusion says that unemployment income doesn’t count towards your AGI when you’re determining whether you’re eligible for the credit.

In 2021, the maximum income to be eligible for the credit if you’re single filing status with no dependents is $21,430. If your income is $22,000, you don’t qualify.

But, if $1,000 of that $22,000 was from unemployment, it’s excluded, and your income for determining your credit is actually $21,000. That’s under the limit, so you can qualify for a credit.

Is retirement income investment income?

Retirement income and investment income are different types of income. A retirement account distribution does not count as investment income. Neither does having investment gains or dividends inside of a retirement account. Investment income means income from taxable investment accounts. 

How long do I have to respond?

There is no deadline to respond to a CP09 notice. The IRS says to not respond if you determine you weren’t eligible to claim the Earned Income Tax Credit.

If you did miss taking the credit, you have up until the usual time to file an amended return. That’s generally within three years of the original return due date.

How long does it take to get my refund?

It typically takes about 6-8 weeks for the IRS to verify your worksheet and send your check. During COVID-19, the IRS has had major mail processing and staffing problems and has been taking months to issue some refunds.

How do I check the status of my CP09?

There is no way to track the status of your CP09 online. The IRS responds by mail. If you haven’t received a response after eight weeks, you can call the IRS to check the status.

Can I handle this on my own?

When the IRS is trying to give you money and isn’t even making you do the math, it’s usually a safe bet to say that you can respond on your own. However, if you have questions or you’re concerned you might have missed other deductions or credits, you might want to talk to a tax professional.