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4 - Erroneous AbatementThe timely filed TC 150 return for TY 2018 is determined to be a nullity. The valid taxpayer filed a return reporting tax of $.00 and withholding of $2,500 which posted as a TC 976. Form 14039 is included with the return. The ASED for the valid return is expired. Based on the original return, the account shows TC 150 tax of $5,000, and withholding of $6,000. A CP 2000 proposing a tax increase of $2,000 based on unreported income is issued to the valid taxpayer’s last known

Example:

Internal Revenue Manual Part 25. Special Topics · 2026-10-03 edition · updated 2026-10-04 · United States

The taxpayer filed HOH with an AGI of $120,000 and 1 qualifying dependent (age 10).$120,000 − $112,500 = $7,500$7,500 ÷ $1,000 = 7.5 (round up to 8 for computation of the reduction amount)$50 × 8 = $400$7,500 × 5% = $375$1,000 − $375 = $625 (amount of additional credit after limitation)$2,000 (child tax credit amount) + $625 (additional credit for 2021) = $2,625 (total credit)

Initially, the IRS will identify eligible taxpayers and calculate the Advanced Child Tax Credit (AdvCTC) using tax year 2020 return information (2019 if 2020 is not available). Each condition listed below must be met to potentially receive AdvCTC:

The tax return must be an eligible return type to claim CTC (Forms 1040, 1040SR, 1040NR).

The tax return must include an address that is U.S. domestic (non-territory), unless the account was subsequently updated to include a U.S. domestic address. APO, FPO, and DPO (military addresses) will be treated as U.S. domestic addresses.

The tax year 2020 return (2019 if 2020 is not available) must contain CTC qualifying children.

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▸Contents — Internal Revenue Manual Part 25. Special Topics
Internal Revenue Manual Part 25. Special Topics

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