Tax Changes in 2021

[BT19]

Hello, my tax situation in 2021 is the exact same situation as 2020, and my taxable income is about 2,000 higher. But my taxes due have increased by about $5,000.

All our income (married filing jointly) comes from 1099 and Single member LLC on both years. Would anyone know how this is happening?

Thanks.

[KrisD15]

That is a pretty broad question, there are many factors to a tax return. 

First, I would point out the Child tax Credit. Did you receive advance payments that makes your tax seem higher?

Compare your 2021 Adjusted Gross Income on your 1040 Line 11 Taxable Income on Line 15 and TAX on Line 16 to 2020 to get a better idea of where there is a difference. 

If those amounts are close to being the same, the difference may be a credit which would be reported on the lines that follow. 

TO LOOK AT YOUR 1040 USING TURBOTAX ONLINE:

Click "Tax Tools" on the LEFT SIDE BAR then click "Tools" which shows open below 

Click "View Tax Summary" on the screen

Click "Preview my 1040" which now appears on the LEFT SIDE BAR 

[BT19]

Thanks KrisD15, 

Lines 11, 15 and 16 are more or less the same. But yes indeed I did receive advance payments for Child Credit. So I guess that is where the difference lies?

[KrisD15 · Accepted solution]

Again, hard to say without looking over your return, but Advance Child Tax Credit Payments would certainly make a difference. 

If those numbers on lines 11, 15 and 16 are very similar from 2020 and 2021, then you're right, your income hasn't changed much. And your "tax liability" hasn't changed much. What did change is your refund, or what you expected to get as a refund. 

The child tax credit would have been included in your tax refund for 2020. If you received Advance Payments, that amount would no longer be included in your refund since you already got the payments. 

Another consideration is if you were sending in any estimated tax payments and if the amount of those payments differed much from 2020 to 2021. 

Credits are listed below line 18, you might want to compare those as well.