Can someone help me understand why I made less money in 2022, no changes to my status, didn't take out retirement money etc and I go from owning $1400 to $3900

[andytif98]

I paid the IRS $1400 for 2021 tax year and now it's showing for 2022 I owe $3900.  This makes no sense at all.  

[ee-ea]

The best way to find out what happened is to make a line by line comparison of this return and the prior one(s).

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-refund/refund-go-compared-last-year/...

[JulieS]

Yes, ee-ea has a point that the best way to identify what has changed is to do a line by line comparison. 

That being said, there are several possible reasons for this change.

In 2021, the rules for Earned Income Credit, Child Tax Credit and Child and Dependent Care Credit were enhanced in an effort to get more income into people's hands during the pandemic. For the 2022 tax year, the rules revert to the "old" rules. 

• Earned Income Credit - For 2021 taxpayer with no qualifying children could get  up to $1502 in EITC.   For 2022, the maximum amount of the earned income tax credit is now $560 for a  taxpayer with no qualifying children. The credit was available for all ages in 2021, for 2022 that age cap is 65.
• Child Tax Credit - In 2021 you could get $3600 for a child under 6 or $3000 for a child between 6 and 17 even if you had no earned income.   For 2022, the maximum amount of the child tax credit is now $2000.
• Child and Dependent Care Credit - The  Child and Dependent Care Credit returns to pre-pandemic levels this year. In 2021, you could get credit for up to 50% of $8000 for one child under 13 and 50% of $16,000 for two qualified dependents. For 2022, you can get 20% to 35% of $3000 for one child and $6000 for two children.

Sometimes making less money reduces your tax credits and your tax withheld. 

Earned Income Credit is based on your income and the amount rises with your income to a point, and then declines from its peak with more income. 

Employers withhold based on the amount you make per pay period. For example, a single person making $500 per week has $23.81 withheld in federal tax. The same person making $1000 has $83.81 withheld. 

So it's easy to see that if you have job where you don't make much money, or if you have a side job, not enough tax will be withheld unless you ask for it on your W-4 form. 

Since you owed this year and last, you need to either adjust your withholding, or start making estimated payments. Click here for help with withholding.

Click here for more about estimated payments.