It took me a while to wrap my head around the logic, that it is indeed computing it correctly. First I manually filled out Schedule 8812 direct from the IRS website, but I still wasn't quite understanding why it wasn't working, because I was hung up on owing taxes, when my total CTC should be $12k (in my case with 4 children) regardless of when I receive the credit, at tax time or as an advance.
I finally just wrote it all down and compared the two options: Half of the credit received in advance AND all of the credit received when filing.
Advance option (hypothetical numbers)
4 kids, so half of credit is 6,000, received 1,000 per month july 2021-dec 2021
Taxable income is X and total tax is 10,000.
No other credits, just the second half of the CTC, so I owe $4,000 (10k-6k).
But I've already received the advance $6k, so that means I'm up $2k (6k advance minus 4k payment)
Now without the advance credit,
Still 10k total tax, but now CTC is $12k
So I get a REFUND of $2k. And I'm up $2k total.
