Adoption Credit/Child Tax/Advanced Child Credit Applied Order

[sonofthebearded]

This is my first time having any issues with taxes. We adopted our daughter last year, so I did the adoption credit, but TurboTax showed my refund as $8725 and IRS adjusted to $3925. $4800 less, which appears to be the child tax credit for my 3 kids. I'm having a hard time deciphering what the deal is. It appears to be the order the IRS is applying the credits in, but they appear to not be doing it in the correct order according to the IRM. Can you advice?

[KrisD15]

That does not sound right. 

The Child Tax Credit is 2,000 per child. If all three children are eligible, that would be a credit of 6,000.

If that credit was not taken, you would get the "Additional Child Tax Credit" which is 1,600 per child. 

So the difference would be 400 x 3 or 1,200. 

Please look at your 1040 line 19 for the Child Tax Credit and line 28 for Additional Child Tax Credit. 

The adoption credit is on Schedule 3 which is listed on the 1040 line 31.

[sonofthebearded]

Thank you for the reply. I finally had time to look into this again:

1040 line 19: 1,200

Line 28: 4,800

Line 31 on 1040 is blank - are you sure that's the correct line? It says Amount from Schedule 3, line 15. Sched 3 line 15 is add lines 9-12 and 14 which are all blank.

I called the IRS and the first lady was rude and hung up on me. I talked to a man next who ran through all of the worksheets and said it looked like $4,800 was taken off the Adoption Credit? He got to the 8839 Credit Limit Worksheet - Line 15 section and was getting a different amount from what TurboTax calculated(6,817) for line 2 (it was 87 thousand something - I didn't write down the exact amount) but also said it was a different amount than the IRS computer calculated. He transferred me to the credits department who said they couldn't help and transferred me to another department that couldn't help. I am now waiting another callback.

[Hal_Al]

Q. Line 31 on 1040 is blank - are you sure that's the correct line? 
A. The adoption credit goes on line 20 of form 1040 and comes from line 6c of Schedule 1 after being calculated in form 8839, subject to "the amount from line 5 of the Credit Limit Worksheet in the instructions" (line 15 of form 8839).

What does all that mean?  It appears to mean that you don't get any adoption credit (for 2023) because you have no tax liability to offset with the credit.  The adoption credit is "non refundable". But you do get to carry it forward and maybe claim some of  it in each of the next five years.

The real question appears to be how did TurboTax (TT)claim an adoption tax credit, for you when you didn't have a tax liability.  

Revie your original form 1040 for the source(s) of that $8725 refund (what lines are adding up to $8725). 

[AmeliesUncle]

I haven't followed your numbers, but yes, there is a problem with the IRS computers calculating things (the Adoption Credit versus the Child Tax Credit/Refundable Child Tax Credit) differently than what is in the Instructions.  There are many people in a similar situation as you, but I'm not sure where the status is at this point.