@garya505 @xmasbaby0 @Critter-3
so, I went back and looked REALLY closely at how the Child Tax Credit works:
The calculator is CORRECT. UNEARNED Income will get you the credit (under certain circumstance)
- There is a non-refundable child tax credit that is simple and straight-forward: $2,000 per qualifying child. (obviously limited to the Line 18 tax liability because this is a non-refiundable credit)
- There is a refundable credit available, but it is limited based on the lesser of:
- $1,500 per child
- 15% of earned income over $2,500
- $2,000 per child less non-refundable credit
So having EARNED income is ONLY a requirement for the REFUNDABLE portion of the credit.
If you have significant UNEARNED income, which generates a tax liability, you can claim the CTC up to the limit of $2,000 per child or the tax liability (line 18), whichever is less.
If your tax liability is less than $2,000 per child, you are not able to capture the rest of the $2,000 credit without EARNED income
The Dinkytown and AARP calculators are CORRECT (I traded emails with Dinkytown and there is one minor error that will be fixed by Dec 1: it is using $1400 per child instead of $1500 in the sub-bullet above.)
I ran examples through 2022 Deluxe Desktop to prove this and worked through the 8812 instructions on paper.
@garya505 as long as Line 18 of Form 1040 exceeds $2000 per child, you are eligible for the entire credit, even if all your income is unearned (i.e.. SS, pension, RMD, dividends, interest, capital gains). But if Line 18 is less than $2000 per child, your credit is limited to Line 18 and you are not able to capture the rest of the $2,000 credit.
