Without being able to compare your return from last year to this year, it is hard to say for sure, but a lower-than-expected refund for Head of Household with dependents is typically caused by shifts in income, credit eligibility changes (especially for students), or more accurate tax withholding throughout the year.
For the 2025 tax year (filing in 2026), several specific factors may be impacting your refund:
- The most common reason for a sudden drop in refund for parents is a child turning 17.
- For 2025, the Child Tax Credit (CTC) is $2,200 per child, but only for those under age 17 at the end of the year.
- If one of your dependents turned 17 in 2025, they no longer qualify for the $2,200 CTC. Instead, they qualify for the Credit for Other Dependents, which is a non-refundable $500 credit. This is a $1,700 loss in credit value per child.
Since you mentioned one dependent is a student, the type of credit you are claiming matters:
- The American Opportunity Tax Credit (AOTC) is worth up to $2,500 (with up to $1,000 being refundable). However, it is only available for the first four years of post-secondary education.
- If your student has finished their first four years or is in grad school, you likely moved to the LLC. The LLC is non-refundable and capped at $2,000 per return, not per student. If you have no tax liability to offset, this credit will not increase your refund.
Another reason may be due to The Earned Income Tax Credit. The EITC is highly sensitive to your Adjusted Gross Income (AGI). The amount of your AGI can either increase or decrease your EITC.
Also, if your employer withheld less tax from your paychecks throughout 2025, you received that money "upfront" in your take-home pay rather than waiting for it as a large lump sum refund.
To see exactly where the money went, compare your 2024 and 2025 returns:
- Select Tax Tools > Tools from the left menu.
- Select View Tax Summary.
- Compare the following lines to your 2024 return:
- Total Income: Did your earnings increase?
- Total Credits: Is this significantly lower than last year? (Check Schedule 3 and Form 8812).
- Total Payments/Withholding: Did you pay in less through your employer?
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