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CP590 notice: what it means and what to do
Got an IRS CP590 notice? Here is what it means, your deadline, what to check before you answer, and how to reply. Check your own letter free: it stays on your phone.
Check my CP590 notice freeWhat the IRS says this notice is about
This notice is sent to you when you incorrectly claimed one or more of the following on your client’s returns:
- Earned Income Tax Credit (EITC)
- American Opportunity Tax Credit (AOTC)
- Child Tax Credit (CTC) / Additional Child Tax Credit (ACTC) / Credit for Other Dependents (ODC)
- Head of Household (HOH) filing status
What you need to do
Follow your due diligence requirements so you and your clients can avoid penalties and other unwanted actions.
Your deadline
Answer by the date printed on your notice. If there is no date, answer as soon as you can, and call the number on the notice if you need more time.
What to check before you answer
You may be able to remove the penalties
If you had no penalties in the 3 tax years before, filed all required returns, and paid or arranged to pay the tax, the IRS First-Time Abatement policy can remove failure-to-file and failure-to-pay penalties. You can ask in writing or by phone.
Cannot pay it all now? Ask for a payment plan
You can apply for a payment plan on irs.gov. Interest keeps running until the balance is paid, so pay what you can now.
Is this letter really from the IRS?
The IRS writes first by mail. A real letter shows a notice or letter number, your name and part of your tax ID number. The IRS does not ask for payment by gift card, crypto or wire transfer. If in doubt, sign in to your IRS online account, where many notices are listed.
You may want to
- Review Internal Revenue Code section 6695(g) and Treasury Regulation section 1.6695-2.
- Review common mistakes:
- Underreporting wages or income and misreporting income and expenses from Schedule C, Profit or Loss from Business.
- Claiming children who aren’t your client’s child, sibling, grandchild, niece or nephew.
- Claiming children who didn’t live with your client for more than 6 months.
- Claiming the EITC for a married client who doesn't file a joint return and doesn't meet the additional rules to claim the EITC.
- Claiming a student who didn't receive a Form 1098-T, Tuition Statement or attend an eligible institution at least half-time for an academic period. An eligible educational institution is a college, university, vocational school, or other postsecondary educational institution eligible to take part in a student aid program administered by the U.S. Department of Education.
- Claiming a student who didn't have qualified education expenses.
- Claiming a student who had already completed four years of post-secondary school at the beginning of the year or already received the credit for four years.
- Claiming a student who didn't pursue a degree, certificate, or other recognized education credential.
- Claiming a child or other dependent who didn't meet the relationship, residency, or age requirements.
- No matching Form W-2, Wage and Tax Statement, Form 1099-MISC, Miscellaneous Income, or Form 1099-NEC, Nonemployee Compensation, from the person the work was performed for.