IRS Notice 797 | Possible Federal Tax Refund Due to the EITC

November, 13 2025 by Charla Suaste

What is IRS Letter 797? (And Why You Might Be Glad to Get It)

For most people, seeing an envelope from the IRS in the mailbox is enough to cause a mild panic attack. But what if that letter was actually good news? The IRS Letter 797 is one of those rare notices that may bring a smile to your face. It's a notification about the Earned Income Tax Credit (EITC), a valuable benefit that could lead to a significant tax refund.

Unlike balance-due notices or audit letters, this letter isn't about collecting money from you. Instead, it's about making sure you don't miss out on a credit you may be eligible for. This letter is typically sent out by your employer, not directly by the IRS, to inform you about the EITC. Many states actually require employers to provide this notice to employees who didn't have federal income tax withheld from their wages.

What The Letter 797 Entails

The notice is a straightforward, informational document. It will include:

• A brief explanation of the EITC: It will tell you that the EITC is a refundable tax credit for certain workers. 
• The purpose of the notice: It clarifies that your employer is sending this to make you aware of this important federal tax benefit. 
• Eligibility criteria: The letter will give you basic information on who can qualify for the credit, including income limits and family size. 
• How to claim the credit: It will tell you that to claim the EITC, you must file a tax return, even if you don't normally need to. 
• Maximum credit amounts: It may provide the potential maximum credit amounts for the tax year in question, which can be thousands of dollars. 

The key takeaway from this notice is that you should investigate your eligibility for the EITC. Just because you don't owe any tax or have any withheld doesn't mean you can't get a refund from this credit.

Your Next Steps: A Guide to Action

1. Read the Notice Carefully: Take a moment to read the entire notice. It's a short, simple document designed to provide you with the information you need. Pay attention to the tax year it applies to and the eligibility requirements it lists. 
2. Check Your Eligibility: The IRS provides tools and resources to help you determine if you qualify for the EITC. You can visit the IRS website or consult Publication 596, Earned Income Credit (EIC). The EITC is based on your income, filing status, and number of qualifying children. It's crucial to check the specific income thresholds for the year the notice is for. 
3. File a Tax Return: This is the most important step. If you're eligible for the EITC, you must file a federal tax return to claim it. This is true even if your income is below the filing threshold and you don't owe any tax. If you have qualifying children, you'll also need to complete and file Schedule EIC. 
4. Consider Free Tax Help: The IRS offers free tax help to millions of taxpayers. You may be eligible for Free File, a service that allows you to prepare and file your federal tax return for free using guided tax preparation software. There are also Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs that provide free in-person tax preparation. 
5. Seek Professional Help if Needed: If your tax situation is complicated or you're unsure about your eligibility, it's a good idea to consult a tax professional. They can help you determine if you qualify for the EITC and other credits, and ensure your return is filed correctly. 

What if I have Audit Defense with TaxAudit?

Since Letter 797 isn't an audit notice, you don't need to report it to us as if it were a tax examination. This letter is simply a heads-up from your employer about a potential tax credit. However, our members know that Audit Defense with TaxAudit provides peace of mind for your entire tax return. If you are a member for the tax year in question and would like us to review this notice and advise you of next steps, you are welcome to start a case on our website by clicking here or calling our customer service team, and they will be happy to help.