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Notice code 542 (Default) — We didn’t allow part or all of the amount claimed as Earned Income Credit (EIC) on your tax return b…
We didn’t allow part or all of the amount claimed as Earned Income Credit (EIC) on your tax return because the modified adjusted gross income was computed incorrectly when figuring the EIC. The mistake may be due to losses reported on your tax return, the amount of tax-exempt interest you reported, or the computation of the non-taxable part of a pension, annuity or IRA distribution.
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542
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What the IRS language says
We didn’t allow part or all of the amount claimed as Earned Income Credit (EIC) on your tax return because the modified adjusted gross income was computed incorrectly when figuring the EIC. The mistake may be due to losses reported on your tax return, the amount of tax-exempt interest you reported, or the computation of the non-taxable part of a pension, annuity or IRA distribution.
What it usually means
542 is in our IR Manual catalog. Official wording is dense — we translate it for business owners and individuals and map realistic next steps.
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