Errors on your tax return happen, and generally they delay your refund. When the mistake is made while claiming the Earned Income Tax Credit, you can expect to wait a little longer to receive that part of your tax refund, even extending into months-long delays. In some cases, errors on the EITC portion of your tax return could result in a denial of your entire credit.
Should the IRS deny your EITC claim, you’ll suffer some repercussions including:
Repayment of the EITC amount you’ve received plus interest.
Filing Form 8862, “Information to Claim Earned Income Credit After Disallowance” prior to attempting to claim the EITC on another tax return.
If the mistake is deemed reckless or intentional by the IRS, you won’t be able to claim the EITC for the following two years.
If the IRS determines your tax return was filed fraudulently, you’ll be banned from claiming the EITC for the next decade.