Fedral Refund

[AsimAyyub]

Hi All, 

I have a questions about my fedral refund (For 2022) which dropped for about 5k compared to year 2021, I compared total income of 2021 vs 2022 there is only about 2k increase in it, in 2022, and I have same numbers of kids as 2021 but I am wondering why the refund dropped this much. Can someone please tell me the possible reasons/situations of this drope in refund and if there is any way to fix that. I haven't file my taxes yet so I will be able to chnage that. I am using desktop version of TurboTax Delux.

Thanks for the Help. 

[bluedeb · Accepted solution]

It could be because the extra child care credits given for Covid-19, were not reinstated.

Child Care Credit for 2022 Tax Year

Unfortunately, Republicans and Senator Manchin let Biden’s one-year child tax credit expire at the end of 2021. Now families applying for the credit can only get up to $2,000 per child under the age of 17. And it is only partially refundable, which means that if the credit exceeds the amount of taxes you owe, you can receive a refund for the difference.

[AsimAyyub]

2023 or 2022?

[xmasbaby0 · Accepted solution]

The tax laws changed for 2022.  The child tax credit, childcare credit and earned income credits were not nearly as generous.  And there is no stimulus payment (or recovery rebate credit) being added to your 2022 refund.

The rules for getting the child tax credit on a 2021 tax return and now on a 2022 return are very different.  For 2021 you could get $3600 for a child under 6 or $3000 for a child between 6 and 17 even if you had no income/did not work.   That is NOT the way it will work for your 2022 tax return.  The “old” rules are back. 

  The maximum amount of the child tax credit is now $2000 per child; the refundable “additional child tax credit” amount is $1500.   In order to get that credit, you have to have income from working.  The credit is calculated based on the amount you earned above $2500 multiplied by 15%, up to the full $1500 per child. 

 If your child is older than 16 at the end of 2022, you do not get the CTC.  But you may still get the non-refundable $500 credit for other dependents instead.

https://ttlc.intuit.com/questions/1900923-what-is-the-child-tax-credit

https://www.irs.gov/help/ita/does-my-childdependent-qualify-for-the-child-tax-credit-or-the-credit-f...

And for the Earned Income Credit—-the rules are back to the “old” rules—

Those under 25 and over 65 without children are not eligible as they were uniquely in 2021.   And you cannot use your income from any earlier tax year to get the EIC for a 2022 return.  There is no “lookback” for 2022.  EIC for 2022 will be based on the income you earned by working in 2022.

https://ttlc.intuit.com/questions/1899157-what-are-the-qualifications-for-the-earned-income-credit-e...

https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/use-the-eitc-assistant

Look at your 2022 Form 1040 to see the child-related credits you received

PREVIEW 1040

https://ttlc.intuit.com/questions/1901539-how-do-i-preview-my-turbotax-online-return-before-filing

Child Tax Credit line 19

Credit for Other Dependents line 19

Earned Income Credit line 27

Additional Child Tax Credit line 28

[AsimAyyub]

Thanks for the detailed answer. I have 3 kids and the older one is 7 and other 2 are younger.