2021 Child Tax Credit calculation error?

[sal4210]

I got to the child tax credit as the last item I was entering on my taxes. W-2s and other income were entered, AGI did increase about 5k from 2020, before entering child tax credit info we owed about 1k. I entered in what we got in advanced payments ($2,725) and now we owe $3,736. Why would we need to not only repay ALL of the advanced payments but an additional $10 and not get any of the other "half" we would supposedly get at filing? I knew with an increased AGI we may pay some back, but 5k is not an unreasonable jump in AGI over a year. Even if AGI grew substantially, don't married couples filing jointly pretty safely (less than 200k AGI) still get at least the previous credit of $4,000, meaning we would have still been owed $1,275 (4,000-2,725 advance paid)? Line 28 of 1040 shows $2,474 and turbotax even did the "congrats parent you get a credit of $2,474!" message as my amount owed skyrocketed by $2,736. 

[xmasbaby0]

Okay---you are confusing child tax credit and childcare credit ---so let's clear that up.   The child tax credit is the one that gave you six months of advance payments from July to December.  And you get the other half on your 2021 tax return if you are still eligible.

The childCARE credit is a credit you get if you paid someone to take care of your child while you worked.

Those are two separate different credits.

And....the child tax credit phases out for AGI's above $150K for  a married joint return.  So it sounds like your CTC is phased out.

Q C1. What is the amount of the Child Tax Credit for 2021? (updated January 11, 2022)

A1. For tax year 2021, the Child Tax Credit increased from $2,000 per qualifying child to:

• $3,600 for children ages 5 and under at the end of 2021; and
• $3,000 for children ages 6 through 17 at the end of 2021.

Note: The $500 nonrefundable Credit for Other Dependents amount has not changed. For more information about the Credit for Other Dependents, see IRS Publication 972, Child Tax Credit and Credit for Other Dependents PDF.

Q C2. Can my Child Tax Credit amount be reduced based on the amount of my 2021 income? (added June 1...

A2. Yes. The Child Tax Credit phases out in two different steps based on your modified adjusted gross income (AGI) in 2021.

The first phaseout can reduce the Child Tax Credit to $2,000 per child.

• That is, the first phaseout step can reduce only the $1,600 increase for qualifying children ages 5 and under, and the $1,000 increase for qualifying children ages 6 through 17, at the end of 2021.

The second phaseout can reduce the remaining Child Tax Credit below $2,000 per child.

For additional information on the amounts of modified AGI that reduce the 2021 Child Tax Credit, see Q C4 and Q C5, below.

Q C3. What is my modified AGI? (added June 14, 2021)

A3. For purposes of the Child Tax Credit and advance Child Tax Credit payments, your modified AGI is your adjusted gross income (from the 2020 IRS Form 1040, line 11, or, if you haven’t filed a 2020 return, the 2019 IRS Form 1040, line 8b), plus the following amounts that may apply to you.

• Any amount on line 45 or line 50 of the 2020 or 2019 IRS Form 2555, Foreign Earned Income.
• Any amount excluded from gross income because it was received from sources in Puerto Rico or American Samoa.

If you do not have any of the above, your modified AGI is the same as your AGI.

Q C4. How does the first phaseout reduce the 2021 Child Tax Credit to $2,000 per child? (added June ...

A4. The Child Tax Credit begins to be reduced to $2,000 per child if your modified AGI in 2021 exceeds:

• $150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
• $112,500 if filing as head of household; or
• $75,000 if you are a single filer or are married and filing a separate return.

The first phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.

Q C5. How does the second phaseout reduce the remaining $2,000 Child Tax Credit? (added June 14, 202...

A5. The Child Tax Credit won’t begin to be reduced below $2,000 per child until your modified AGI in 2021 exceeds:

• $400,000 if married and filing a joint return; or
• $200,000 for all other filing statuses.

The second phaseout reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.

2021 Child Tax Credit and Advance Child Tax Credit Payments Topics

• Topic A: General Information
• Topic B: Eligibility for Advance Child Tax Credit Payments and the 2021 Child Tax Credit
• Topic C: Calculation of the 2021 Child Tax Credit
• Topic D: Calculation of Advance Child Tax Credit Payments
• Topic E: Advance Payment Process of the Child Tax Credit
• Topic F: Updating Your Child Tax Credit Information During 2021
• Topic G: Receiving Advance Child Tax Credit Payments
• Topic H: Reconciling Your Advance Child Tax Credit Payments on Your 2021 Tax Return
• Topic I: U.S. Territory Residents and Advance Child Tax Credit Payments
• Topic J: Unenrolling from Advance Payments
• Topic K: Verifying Your Identity to View your Payments
• Topic L: Commonly Asked Shared-Custody Questions
• Topic M: Commonly Asked Immigration-Related Questions
• Topic N: Returning a Payment

Page Last Reviewed or Updated: 18-Jan-2022

[sal4210]

Oops, the subject should not have said child care - I do know those are very different and didn't mean to put that there, thank you! 

So even when I read this, we would get $4,000 (more actually but for easy numbers and since we are nowhere near $400k, $4,000 is conservative). 

Shouldn't line 28 then show $4,000 and not $2,474? And is it strange that we are having to repay more than we were even paid? 

[RobertB4444]

The TurboTax program shows the entire Child Tax Credit as being due to you as soon as you start.  $3000 to $3600 per child.  You entered the children so it shows the credit due to you.  But then you enter the amount that you received already and it reduces the refund that you are due by the credit that you already received. 

Watching that refund tracker is often a pathway to madness.

Not sure what's up with the other $11.  I'm betting that that is a penalty for underpayment of taxes owed.  

[clbilling]

I think that a recent update created and error with the child tax credit.  The child tax credit schedule 8812 is now only showing $500 per child and it should be $3,600-$3,000 depending on the Childs age.  Will this error be corrected soon???

[xmasbaby0]

There is no error.    If your child was older than 17 at the end of 2021 then you only get the $500 credit for other dependents for the child.   Or if you did not enter a Social Security number for the child you only get the $500 credit.

If you are getting the child tax credit it will be on line 28 of your Form 1040.

Or did you enter the information for your child incorrectly?

Make sure you have entered your child as a dependent in My Info, and that you have entered the child's Social Security number. If your child was born in 2021make sure you said he lived with you the whole year.  There is an oddly worded question that asks if the child paid over half their own support.  Say NO to that question.

[clbilling]

All of the dependent's information was transferred from my prior returns and has been reviewed and i even reentered the data.  They children are under 12 and under 6.  I have followed the IRS worksheets for the child tax credit and turbo tax is not bringing in the data correctly.

[clbilling]

There must have been some glitch in my program.  I uninstalled the software and reinstalled. Once I got back in it was calculating the credits correctly again.

Thank goodness! I wish I would have thought to do that a long time ago!

[urkrishnan25]

I suppose to get child tax credit of $2000 according to my income range. But TurboTax gave me only $1000 credit I received as an advance payment from July. My question is do I need to file form 8812 separately or Turbotax will file additional form at the end? Currently it looks like I am getting only $1000

[MayaD]

Use Schedule 8812 (Form 1040) to figure your child tax credits, to report advance child tax credit payments you received in 2021, and to figure any additional tax owed if you received excess advance child tax credit payments during 2021.

TurboTax will fill out Schedule 8812 (Additional Child Tax Credit) for you if you have a child that qualifies for this credit.

 Log in to your account.

1. Go to Federal Taxes.
2. Go to Deductions and Credits.
3. Go to You and Your Family and click show more.
4. Select Child and Other Dependent Tax Credits and click Revisit.

If your available Child Tax Credit is greater than your tax liability, the Child Tax Credit can only reduce your tax bill to zero — you don’t get any unused portion of the credit back as a refund.

However, you may be able to claim the Additional Child Tax Credit, which allows you to receive up to $1,400 of the $2,000 Child Tax Credit per child as a refund.  This means you get a check for the remaining Child Tax Credit (up to $1,400 per child) after your tax bill is reduced to zero.

To claim the Additional Child Tax Credit, you need to complete form 8812 and attach it to your form 1040.

[Joepeka]

Perhaps I am totally misunderstanding the handling of the 2021 child tax credit. We have two children, both under age 6 and received the advance payments in 2021 (July-December) for a total of $3600. When entering all our data into TurboTax Deluxe (desktop version), once we entered the $1800/child advance credit, our refund dropped by $3600. Our AGI is about $7000 more than 2020 but is still well under the $150,000 phase out level for the credit. Is this some calculation error in TurboTax or am I totally misunderstanding the credit? In looking at the 1040 form in TT, the remaining $3600 credit is showing but I'm struggling to understand why our tax liability appears to have gone up $3600 due to the advance payments in 2021.

[xmasbaby0]

Federal>Deductions and Credits>You and Your Family>Child Tax Credit

The IRS is sending out letter 6419 to you.  It will show the amount of advance child tax credit that you received during 2021.  Enter the information from that letter carefully.   

The remaining amount of CTC that you can receive will show up on line 28 of your 2021 Form 1040.   Then it will calculate down to the refund you see on line 35a or the tax due on line 37.

PREVIEW 1040

https://ttlc.intuit.com/questions/1901539-how-do-i-preview-my-turbotax-online-return-before-filing

Click on Tax Tools on the left side of the screen. Click on Tools. Click on View Tax Summary. Click on Preview my 1040 on the left side of the screen.

NOTE:   The CTC is indeed a “credit” that can be applied toward any tax liability that you would otherwise have to pay as “tax due”  to the IRS.

[DoninGA]

---

@Joepeka wrote:

Perhaps I am totally misunderstanding the handling of the 2021 child tax credit. We have two children, both under age 6 and received the advance payments in 2021 (July-December) for a total of $3600. When entering all our data into TurboTax Deluxe (desktop version), once we entered the $1800/child advance credit, our refund dropped by $3600. Our AGI is about $7000 more than 2020 but is still well under the $150,000 phase out level for the credit. Is this some calculation error in TurboTax or am I totally misunderstanding the credit? In looking at the 1040 form in TT, the remaining $3600 credit is showing but I'm struggling to understand why our tax liability appears to have gone up $3600 due to the advance payments in 2021.

---

Before you entered the advance child tax credit you received in 2021 your Total Child Tax Credit of $7,200 was entered on your tax return and was reflected in your Federal Tax Refund.  After you entered the $3,600 of the advanced child tax credit you received in 2021 the amount of the Child Tax Credit was reduced to $3,600 and reflected in your tax refund.

The Child Tax Credit is entered on your federal tax return Form 1040 on Line 28. It is added to your other tax payments, it is not a separate refund. Your Total taxes from Line 24 are subtracted from your Total tax payments on Line 33. If you have an overpayment then that is entered on Line 34 as your federal tax refund.

You can view your Form 1040 at any time using the online editions. Click on Tax Tools on the left side of the online program screen. Click on Tools. Click on View Tax Summary. Click on Preview my 1040 on the left side of the screen.

[FangxiaL]

Before you entered the $1,800 you already received for each child, your refund included the $3,600. Once you indicated that you have received advance child tax credit, you can only claim the other half ($3,600) of the Child Tax Credit you are entitled to on your 2021 tax return. Essentially you received part of your 2021 refund in advance. 

Your tax liability should not go up, only your refundable credit goes down, given the fact you have received half of that credit.

@Joepeka

[Joepeka]

Thank you for the explanation, it does makes sense now. I did look at the 1040 prior to entering the ACTC payments and it did show $7200; after entering the ACTC payments, the credit dropped to $3600 as you mention, thus the reduction in the refund. Thank you again!