Advance Child Tax Credit payments - Too much in advance payments

[aramkannan]

I did go through other discussions on Advance Child Tax credit but still couldn't understand why Turbo Tax shows that "You Qualify, but received too much in advance payments". I have 2 qualifying kids (aged 5 and 7) hence qualify for 3600+3000 = $6600 in Child Tax Credit after considering the AGI limit of $150K for MFJ . We did receive advance payments of $3300 in 2021 and I entered these values correctly($1650 each for me and my wife) . I assumed that the remaining $3300 should show as yet-to-be claimed. Instead, my Federal taxes owed shot up after this section and I get the above message that I received too much in advance payments. Also, the summary section that compares deductions for year 2020 vs 2021 shows $4000 for 2020 but only $1000 for 2021. I expected that this comparison should show 3300 instead of 1000. Please let me know whether I am entering this correctly.

[KrisD15]

This does not sound correct although the steps you report for entry sound right.

Is your Adjusted Gross Income under 150,000 for Married Filing Jointly?

If not, the credit will be reduced.

Did you exclude any foreign income?

If so, that could affect the credit.

First, please look at your 1040. 

Are both children listed as dependents with the box for "qualifying for the child tax credit" checked? 

If not, go back to the personal info section and review the interview for the child not showing as qualifying. 

If both children do show as eligible, scroll down the 1040 and look at line 28 for the amount of the credit. This is where you should see 3,300.

If not, look at Schedule 8812 to see what the program reported as advance payments received. 

If you are using Desktop, you can switch to Forms to view Schedule 8812. 

If you are using Online, I suggest you delete Schedule 8812 so that the program will generate a new one and ask again for the payments received. 

If you are still having issues, please let us know what program you are using, Desktop or Online. 

ONLINE:

To view the 1040

Select Tax Tools then TOOLS on the left side bar

Select "View tax summary" on the TOOLS screen

Select "Preview my 1040" which now appears on the left side bar

To Delete a form

Select Tax Tools then TOOLS on the left side bar

Select "Delete a Form" on the TOOLS screen

Scroll down to Schedule 8812 and delete

[aramkannan]

Thanks for the detailed explanation. I have checked the steps mentioned:

In 1040, I see that the kids show up in dependents section but the check box for "qualifying child tax credit" is unchecked.  Only the check box for "credit for other dependents" is checked. Also, the checkboxes on my daughter's row show as unmodifiable (greyed out) while my son's can be changed.

So, as per your suggestions I retook the interview for the kids and it does show them as qualified dependents. I want to mention that I picked that they lived with me for 6 months (not 7 months) , because they were outside the country for the 2nd half of 2021.  Just to figure out the issue I did change the period as 7 months and I do see that if I change it to 7 months (instead of 6 months) the check box for "qualifying child tax credit" is checked and the taxes I owe are reduced to the correct number. So could you please let me know why wouldn't 6 months give me the same qualification for the credit?

[JamesG1]

The qualifications of a qualifying child say that the child must have lived with you for more than half the year.  This IRS FAQ states:

Who Qualifies

You can claim the Child Tax Credit for each qualifying child who has a Social Security number that is valid for employment in the United States.

To be a qualifying child for the 2021 tax year, your dependent generally must:

• Be under age 18 at the end of the year
• Be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece or nephew)
• Provide no more than half of their own financial support during the year
• Have lived with you for more than half the year
• Be properly claimed as your dependent on your tax return
• Not file a joint return with their spouse for the tax year or file it only to claim a refund of withheld income tax or estimated tax paid
• Have been a U.S. citizen, U.S. national or U.S. resident alien

[aramkannan]

Thanks again, but one related question for residency test.

My child was with me for half the year and the other half was spent as vacation in India with my wife. Since we are doing a Married Filing Jointly,  the kids were with one of the parents for the whole year so can they be claimed? Also I do see that there are exceptions for residency test. Following excerpt from IRS site says that temporary absences for vacation can be claimed. If this is true and I can claim then should I make the period of stay as 7 months in Turbo Tax ?

Residency Test

To meet this test, your child must have lived with you for more than half the year. There are exceptions for temporary absences, children who were born or died during the year, adopted or foster children, kidnapped children, and children of divorced or separated parents.

Temporary absences.

 

Your child is considered to have lived with you during periods of time when one of you, or both, are temporarily absent due to special circumstances, such as:

• Illness,

• Education,

• Business,

• Vacation,

• Military service, or

• Detention in a juvenile facility.

[KrisD15]

Yes, that would be considered vacation if they were visiting with intent to return. 

[aramkannan]

Thank you very much for clarifying.

[perlavijay84]

I have the exact same situation. I check my personal info section and all looks good to me. I am using desktop version and the information on 8812 is wrong. How do I get this fixed?