If the max credit allowed on an MCC is 2k, why is Turbotax giving a credit of say, $3500 on that line on the 1040 (includes carryovers from previous years)?

[user09237777]

Percentage is 30 percent of $146,000 with a max of 2k credit but software is showing a credit of over 3k. Am I not understanding this correctly?

[MichaelG81]

Yes, carryovers may apply if your tax due is greater than the actual percentage; limitations apply on tax due. Here's how the credit is calculated. In form mode, click here per the 2022 Form 8396 IRS. Carry Forwards apply.

@user09237777

[user09237777]

@MichaelG81 Is the carryover going to show AFTER filing, because right now on the 1040 through TurboTax let's say it hypotheticlly shows $3000 and increases my refund by as much. I understand how the 8396 works, but the software doesn't allow me to input anything but certain information and doesn't show you the form 8396. I don't want to end up owing due to a software error. Thank you

[MichaelG81]

Yes, the carry forward will show on that Form 8396 that will be printed/saved for you in tax file after or right before filing. The good thing about using TurboTax or uploading your previous year income tax lets us know what is being carried forward and how much we can use based on how much you owe and what was present last year. You may still have a Carry Forward to next year once you do save print your forms, it will be detailed in Form 8396 and shows you amounts right after you Start or Update your MCC. 

Also, as you see on the form 8396 it calculates the carry forward from the previous years and adds it to this years credit amount to give you a total of your credit. I got this with some info inputted.

 

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@user09237777