Return went from a credit to owing

[bmajeski29]

Hello,   my return went from receiving a Credit to now owing the IRS money.  It's saying my Total payments and credits are lower that what was calculated and submitted.  I entered all fields accurately.

Where do I go from here?

[bmajeski29]

More information.

I have all 3 of my kids listed as Dependents.  But on Schedule 8812, Line 4a it lists 2 and then on line 6 it lists 1.   

On the beginning portion of the return that lists my Demographic information and then Dependents, it has 2 kids listed for "Child Tax Credit" and then one is checked off as "Credit for other Dependents".

is this the reason the IRS is saying I owe money.   Please advise

[VolvoGirl]

How old is the oldest?  

A common reason is you claimed too much Child Tax Credit on line 28 but the  IRS had already sent it to you.  Did you check 1040 line 28 for it?  That is the remaining credit you get, not the advance you already got.  It either adds to your refund or reduces a tax due.

How old are your children?  You get Child Tax Credit of 3,600 for under 6 and 3,000 for 6-17.  How much Advance credit did you get?  Only the remaining amount should be on line 28.

[bmajeski29]

For 2021, ages were 13, 11, 6.   Line 28 has $1500 entered.

[Cynthiad66]

Only the IrS can provide the reason you owe money, if they made the adjustment.

Sounds like you have submitted your return to the IRS and they have made adjustments to your refund expected.  Is that correct?

Anyway, the Child Tax credit is computed as stated above by @VolvoGirl.  However, there could be more at play here if the return has been submitted to the IRS and they are making adjustments..

If IRS is making the adjustments based on the return filed.  You will receive a Notice of Deficiency in a few weeks that will explain everything and you will have the ability , at that time, to provide additional information to the IRS.

TurboTax does not process returns and the IRS does not notify TurboTax of any adjustments made.  TurboTax cannot provide any details as TurboTax does not receive any updates from the IRS.

[bmajeski29]

Thank you for the follow up.   My overall issue is, I don't know what additional information to provide the IRS to question this.   I entered the information with Turbo Tax based on all the forms I received; TurboTax calculated that I would get a refund; with the same information, the IRS is saying I owe money.  

How are the results different with the same information?  

[Vanessa A]

The IRS must have information that is different than what you entered into TurboTax.  

First, if line 28 is $1,500, it sounds like you are only getting the Child Tax Credit for one child.  I see you did mention that above.  What was the reason the other 2 did not qualify?  Is it possible that the one that was added didn't qualify either because someone else claimed them or for another reason?

Is it possible that there was an error in your entries on your return?  For instance, on a W2 did  you double check your entries?  If you entered on box 2 that $5,000 was withheld when only $500 was withheld, this would create an issue that has the IRS saying you owe money while TurboTax shows you get a refund as TurboTax is relying on your entries to make calculations while the IRS has the forms there to compare your entries to. 

You should get a letter from the IRS telling you the changes they made and why they made them.  If you disagree with the changes you can follow the instructions in the letter to dispute the changes. 

[bmajeski29]

Thanks Vanessa, I appreciate the thoughts.

That's my most pressing question, I looked over how I entered my kids and they were entered a Dependents.  I didn't input them any differently.  I'm just trying to figure this out and noticed in the final submitted file, I see a difference on Schedule 8812 and line's 4a and 6.  I would assume 4a should have 3 and line 6 have none.  But, I don't see any place to go back to make that change.  And ultimately, I don't know if that is the culprit.

[VolvoGirl]

All your kids should be checked for Child Tax Credit and not Other Dependent.  You must have answered something differently on that one.   Check their birthdate.   Then how much Advance Child Credit did you get during the year?  You should be getting 9,000 for the Child Tax Credit (3x3,000) minus any advance you got.  So line 28 looks low.  But that doesn't explain why the IRS reduced your return.  Did you claim all 3 kids on your 2020 return?

Maybe it for line 30 Recovery Rebate Credit.  How much do you have on line 30?  That's the most common reason this year.   You should qualify for 7,000 minus the 3rd Stimulus Checks you got.  People have been claiming too much on line 30 and the IRS shows they already sent it out.  Line 30 is only if you didn't get the full amount or qualify for more.  

You never said how much is missing.   Did you get the letter from the IRS saying why they adjusted your return?  What all did it say?

[bmajeski29]

The IRS listed 5 potential reasons why they "changed the amount claimed as Recovery Rebate Credit".  It says it could be one or more reasons that are true; they don't state which is true.  3 of the 5 reasons don't apply.   The other two are:

One or more individuals claimed as a qualifying dependent exceeds the age limit (don't think this is true)

The amount was computed incorrectly (this seems most likely).

Then there is a section for Your tax calculations.  It lists My calculations and the IRS calculations which are the same.

Then in the "Payments and Credits" section, it lists Income tax withheld from 1040 form; which matches. Then other credits lists $1500.   So the total of both is lower than the "Tax calculations" so that's why they say I owe more.

But, seems the Payments and Credits part is incorrect due to how TurboTax marked my kids differently.

Can you call me?   This method of support isn't working.

[VolvoGirl]

That is the list of generic reasons they give if they changed the Recovery rebate credit on line 30.  How much is on 1040 line 30?

Did you not get the 3rd Stimulus payment?  Or qualify for more?  Line 30 is only if you didn't get the full amount or qualify for more.  The IRS shows they already sent it to you.

Double check your bank statements and Check your IRS account (both accounts if married)

Your Online Account | Internal Revenue Service

If the IRS thinks they sent it to you but you didn't get it request a trace for a missing third Stimulus payment

https://www.irs.gov/newsroom/questions-and-answers-about-the-third-economic-impact-payment-topic-j-p...

[bmajeski29]

Line 30 has $7000

Yes, I received the 3rd round if the 4/5/21 deposit was the 3rd one.

[VolvoGirl]

It probably was the 3rd Stimulus payment.  Or could it be your 2020 refund?

How much was deposited?    As I said line 30 for the Recovery Rebate Credit should only be the difference of the 7,000 you qualify for and what they sent you.  

[bmajeski29]

Is Form 6419 the correct one to verify what was sent?

[VolvoGirl · Accepted solution]

6419 is what they sent for the Child Tax Credit. The Recovery Rebate Credit is form 6475.  Each spouse gets a letter for half.  So you need to add both spouses together.   

But you should check with the IRS what they sent you.  

Check your IRS account (both accounts if married)

Your Online Account | Internal Revenue Service