IRS rejected my Dependent Tax Credit

[dcornfel1]

I e-filed my taxes with Turbo Tax.  We have 2 children under 18 that meet all the criteria for the child tax credit (SSN, my kids, live with me all year, fully dependent, US citizens, etc . . .)

Line 19 on my 1040 reads 3995 on my turbo tax return.

I received a letter from the IRS stating that they changed this to "0" because either it did not match what was on schedule 8812 or 8812 was filled out incorrectly; and I now owe $$ plus interest.

When I look at my Tax Return (both in turbo tax and in the .pdf I saved when filing),  there is no 8812 in my return.

I've since downloaded 8812 and its instructions from the IRS website and if I fill it out I do get 3995 as the result that should go onto line 19 on form 1040, so the software's calculations were correct, but not clear why the form was not returned.

So, I'm trying to determine why the 8812 would not have been included in my return and what is the next step in fixing this situation. Do I contact the IRS with the 8812 that I filled out myself, or is there a way for Turbo Tax to re-do my return with the 8812 and then re-submit as an amended return? 

Prior instructions on this website say that 8812 is only necessary if the children don't have an SSN, however, the 88132 instructions state that this form is the one form to be used for ALL Child Tax Credit calculations.

Guidance would be appreciated.

[Critter-3]

I GOT A LETTER FROM THE IRS   

https://ttlc.intuit.com/questions/3605673-i-got-a-letter-or-notice-from-the-irs

I AM BEING AUDITED

If you purchased Audit Defense:

https://ttlc.intuit.com/questions/2924451-i-bought-max-or-audit-defense-and-now-i-m-being-audited

AUDIT SUPPORT

https://support.turbotax.intuit.com/irs-notice/audit-support/

Chances are it is not line 19 that is the issue but line 28 ...

Use IRS Form 1040 Schedule 8812 to figure your Child Tax Credits, to report advance Child Tax Credit payments you received in 2021, and to figure any additional tax owed if you received excess advance Child Tax Credit payments during 2021.

What issues are you experiencing?  Are you able to view the computation that the software made for the Child Tax Credit?

If you can view the entire 2021 1040 Federal tax return at Tax Tools / Print Center, you will see: 

• Line 12 of Federal Schedule 8812 which computes the total Child Tax Credit, and
• Line 28 of the Federal 1040 which reports the refundable amount. 

The full amount of the Child Tax Credit is not reported on the 2021 1040 Federal tax return, only the net amount after applying the advance payments.

To view Federal 1040 line 28, go to Tax Tools / Tools / View Tax Summary / Preview my 1040.

If you filed jointly with your spouse, then half your advanced child tax credit payments would be reported to them. If the amount reported on Letter 6419 is exactly half of what you actually received, that is probably the reason why. 

If that is not the case, you first want to check on the IRS website to ensure Letter 6419 has the correct information for your account. If there is a discrepancy between what the website reports and what is on the letter, you should use the amount on the website. The website will also contain information for each payment so you can see exactly where the discrepancy is if there is one.

If the IRS shows a payment that you did not receive, you can request a payment trace from them by calling 800-919-9835 or mailing a Form 3911 for the missing payment. There are most likely to be problems with your payment if you closed the bank account that was receiving direct deposits or if you requested checks.

Since the payment trace is unlikely to be resolved quickly, you can still file using the numbers the IRS reported on Letter 6419. This is likely to get your taxes processed the most quickly, but if they later conclude that the number they reported was not what you received, you may have to amend your return to get the missing amount.

[NCperson]

@dcornfel1 - a few questions.

you note that you indeed got $3995 to display on Line 19, but given the impacts of the 2021 tax laws, for most ALL taxpayers, the child tax credit would appear on Line 28. and nothing would appear on Line 19

That was one of the big changes for 2021 - the child tax credit was 'fully refundable' (meaning even if Line 22 was zero, you were still eligible for the credit.)  In past years, the part of the child tax credit that appeared on Line 19 was limited as Line 22 could not be less than zero. 

So the first thing is to understand why the credit is on Line 19 and not Line 28.  

1) Please look at Line 5 of Form 8812.  What number is there? should be $3600 for each child under 6 and $3000 for each child 6-17 years old.   ( the details are part of the 'Line 5 worksheet' but at least in the desktop version, there is no access to those calculations.) 

2) you were asked along the way if your 'principale place of abode was the US for at least 6 months' - i wonder if this is checked 'no'.  Can you confirm how that was answered in TT.  it needs to be 'yes' for the credit to be on Line 28.

3) how much did you receive for the Advance CHild Tax credit from July - Dec, 2021. Please look in your bank account statement and DO NOT go from memory.  Should be right around the 15th of each month. 

Post back what you uncover, but we'll find the problem and that will provide the path forward on how to fix this. 

[NCperson]

@dcornfel1 - on the abode question, look at lines 13a  Form 8812 - it'll indicate what you checked in TT.  is the box checked or unchecked?

[dcornfel1]

@NCperson and @CRitter3  - Thank you very much for your responses.

Following your suggestions here is the following information.

I don't have access on how TT figured out the Child Tax Credit.  There is no Schedule 8812 on my TT return.  There is a 1040 Wks followed by Scheduled 1,2,3 but no 8812 anywhere.

I don't have a record of Letter 6419 and am unable to access the information on the IRS web site as id.me is having difficulty with my foreign address, see below.   But I found the dollar amounts in my bank account and report them below.

We have lived in NZ since 2016 and have always been very straightforward with this on tax returns in TT, listing our foreign address and a US address for correspondences (my mom's address).  In TT we are listed as "foreign" for state of residence and do provide a US address only for "Mailing Address and Phone Number"

This being said, when I filled out Line 5 of 8812 I get $4000 and I used the Line 5 worksheet offline.

Our primary place of abode was NOT in the US for at least 6 months.  It is checked "No" in TT and also when I filled out 8812 offline.

I was unaware we were getting advanced credits, but I checked our US bank account, which is the one I normally pay my takes from, and to my surprise, from July-Dec 2021 we did receive $2000!  My spouse and I share a joint account so I so not think she would have received anything  separate from this.

Now that I've seen this, I've gone back and RE-done the appropriate section on Child Tax Credits in TT.  TT now tells me the same amount of tax owed as related to me by the IRS in the letter they sent me.

Line 19 on 1040 now reads 2000 instead of 3995, which I assume reflects the $2000 we received in pre-payment credits last year.  So now I think I just pay what the IRS has asked, which is OK.

TT still has not included an 8812 onto my tax return but the numbers seem to work out.

So thank you much, I think the problem has been solved.  Never nice to owe more money, but satisfying to see where the problem was .  I will need to get onto the IRS website so I can check these in the future but there is a process for this.

Kind regards

[NCperson]

@dcornfel1 -great your are comfortable with what occured.

Just an FYI, since you were not in the US for at least 6 months, the child care credit rules are the same as pre-2021 (and what will be in place for 2022 if Congress does not act) 

1) child must be under 17 years old (not under 18)

2) the credit is split up between Line 19 and line 28 (but if your income is high enough, it really doesn't matter)

3)  so the simple case is the credit is worth $2000 per child (under the age of 17). If the child is 18-24 and in school, the credit is $500 on Line 19.  Then in your case, less $2000 already received.