Notice CP75 means that the IRS wants supporting documents or proof of the information on your tax return.
In most cases, the agency uses this notice to request details about the earned income tax credit (EITC) and eligibility criteria for this credit, but the IRS may also send this notice about several other credits.
To help you understand what this notice means, this guide explains why the IRS sends this notice and what you should do if you receive it. To get help now, contact us today — The tax attorneys at The W Tax Group can help you understand and respond to Notice CP75 or any other IRS notices.
Why You Received Notice CP75
The IRS usually sends Notice CP75 to request details about the following:
- Earned Income Tax Credit
- Filing Status
- American Opportunity Credit
- Schedule C Income
- Premium Tax Credit
- Child and Dependent Care Tax Credit
You may receive Notice CP75 if someone else claimed a dependent listed on your return. Or, you may receive this notice if the IRS has reason to believe that some of the information on your return is incorrect. The IRS also sends this notice to people who have been randomly selected for an audit. If you receive Notice CP75, you are not being subjected to a full audit. The IRS is only auditing the details outlined on the notice.
What Happens When You Receive CP75?
The IRS will hold back the portion of your refund related to the EITC, Additional Child Tax Credit (ACTC), Recovery Rebate Credit (RRC), or the Premium Tax Credit (PTC) until you respond to the notice. The notice outlines exactly how you should respond and the documents that you should provide.
How to Respond to Notice CP75
The correct response varies based on the IRS’s request. Here are the issues that the IRS covers with Notice CP75 and a list of the documents that you can use to substantiate each of the following credits or deductions:
Earned Income Tax Credit
To prove that you meet the criteria to claim this credit for each of the children listed on your return, you need to send the IRS the documents listed on Form 886-H EIC. You will need documents that establish the following details:
- That the child lived with you in the United States for more than half the tax year — You can use school, daycare, or medical records as well as statements from social service agencies, employers, Indian tribal offices, landlords, places of worship, or shelters.
- Your relationship with the child — To qualify you for the EITC, the child must be your son, daughter, grandchild, great-grandchild, niece, nephew, brother, sister, half-brother, half-sister, stepson, stepdaughter, step-brother, step-sister, step-grandchild, or step-great grandchild — Legal documents such as birth certificates, adoption records, court decrees, or paternity tests can establish the relationship between you and the child.
- The age of the child — To claim the EITC, the child must be under age 19 at the end of the tax year, under age 24 and a full-time student for at least five months, or any age and permanently disabled. You don’t need any documents to prove the age of someone under age 19 because the IRS can check their Social Security records. But, you will need to provide proof of school enrollment or proof of disability for older dependents.
Make sure that your documents refer to the tax year listed on Notice CP75. For instance, if you receive CP75 in reference to tax year 2021, send documents related to that year, not the current year. Note that you can only claim this credit if you, your spouse if filing jointly, and your child have a valid Social Security Number.
To claim dependents on your tax return, you must meet the residency, relationship, age, and support tests. If you have received CP75, the IRS wants proof that you meet these tests.
You can use the same documents that you used to establish your EITC claim. Or, depending on your situation, you may be able to use divorce decrees, custody orders, birth certificates, marriage certificates, or adoption documents. IRS Form 886-H-DEP has a complete list of documents.
The IRS may also send CP75 to verify your head-of-household filing status. To qualify for head-of-household, you must be currently unmarried, have a qualifying dependent, and pay more than half of the cost of keeping up the home. Here’s how to respond if CP75 wants you to verify your head-of-household status:
- If you’ve never been married, you only have to prove that you have a qualifying person and keep up half the home.
- If you were divorced or separated on the last day of the tax year, send your divorce decree or separation papers.
- If you’re still married but lived apart from your spouse for the last six months of the tax year, send proof of your separate addresses.
- If you’re still married and lived together at any time during the last six months, you can’t claim the head-of-household filing status.
- To prove that your dependent qualifies, use the same documents that you used to establish your EITC claim.
- To prove that you paid more than half the cost of keeping up the house, send details about how you paid rent, utilities, groceries, repairs, etc.
Look at Form 14824 (Supporting Documents to Prove Filing Status) for a full list of documents you can use to support your head-of-household filing status.
American Opportunity Credit
If you claimed the American Opportunity Tax Credit (AOTC), you can verify your claim by submitting a copy of Form 1098-T (Tuition Statement) and canceled checks or receipts for expenses that exceed the amount listed on Form 1098-T.
Note that you cannot claim the AOTC if you received payments from your employer, Veterans’ Educational Assitance, or other benefits. You must subtract those amounts from your total tuition costs. You cannot claim this credit based on expenses that were reimbursed by another entity.
If Notice CP75 requests more information on your Schedule C, the IRS wants proof to back up your small business income and deduction claims. You will need to send proof of your business revenue such as sales reports from your point-of-sale software or bank deposits. You will also need receipts, canceled checks, or bank statements detailing your business expenses.
When CP75 requests info about your Schedule C, you also need to fill out and return Form 11652 (Questionnaire and Supporting Document Form 1040 Schedule C (Profit or Loss From Business)). This form requires basic information about you and your business, a description of your business, and details about how you advertise.
Premium Tax Credit
To claim the Premium Tax Credit, you must get your health insurance through an exchange or marketplace. If you receive Notice CP75 about the Premium Tax Credit, you should send the IRS a copy of your insurance enrollment form or a statement from an insurance provider and proof of any premium payments you made.
Also, include a copy of Form 1095-A (Health Insurance Marketplace Statement). If you don’t have this form, ask your plan administrator. Refer to Form 14950 (Premium Tax Credit Verification) for more details on which forms to send.
Child and Dependent Care Tax Credit
To respond to this request on Notice CP75, you should provide the IRS with the documents you used when you calculated the credit. This includes details about your care provider or a copy of their Form W-10 (Dependent Care Provider’s Identification and Certification).
You may also have to prove that you were using the care to work or to look for work. Supporting documents may include work logs, copies of job applications, or similar information.
What to Expect After You Respond to Notice CP75
The IRS typically takes about 30 days to review the documents you’ve submitted. If the documents prove your eligibility, the IRS will send you a notice saying that your audit was closed. Then, you should receive your refund within eight weeks as long as you don’t owe any other taxes or debts collected from the IRS such as unpaid child support.
If your documents don’t prove your eligibility for the credits, the IRS will send you an audit report. The audit report will show the changes the IRS made to your return by removing or reducing the credits or deductions. It will also outline your updated tax liability or your reduced refund.
What If You Don’t Respond to Notice CP75
If you don’t respond to IRS Notice CP75, the IRS will assume that you don’t want to claim the credit listed on the notice. Then, the IRS will adjust your tax return accordingly. For instance, if the IRS requested more information about the qualifying dependents used for your EITC, the IRS will assume that you no longer want to claim the EITC if you don’t respond.
Similarly, if you don’t provide any supporting documents about your AOTC claim, the IRS will just reverse the credit. Or, if you don’t provide more details about your Schedule C, the IRS may just update the form based on the information it knows is true.
Get Help with Notice CP75
If you’re unsure about how to respond to Notice CP75, consider reaching out to the tax attorneys at The W Tax Group. A tax professional can ensure that you provide the IRS with the correct details to substantiate your claim, and they can help to ensure that the IRS doesn’t make any incorrect adjustments to your tax return.
Get help with Notice CP75 today — contact us at The W Tax Group to talk about your situation and figure out the best steps forward.