Child Tax Credit Not eligible??

[mslaydiej]

It keeps saying my kids are not eligible for the CTC. One is 7, the other is 3. I made a little over $4k & I did pay federal bc I opted for it to be taken out. I stopped working early in the year so i could get into nursing school went to school in May so I have been a full time nursing student so I also have money I paid for tuition to claim about $17,000. So I am seriously confused why my kids do not qualify for it? Is the software just not updated? The irs website says they ARE eligible after I put their info in. 

[NCperson]

@mslaydiej - did you key in the $4000 of income? 

the rules in 2022 are VERY different than 2021. Infact, the rules in 2022 are the same as 2020.  

Look in Forms view - where you children are listed, the check box under 'child tax credit" should be checked.  if they are not that is where the problem is.  did you enter their social security numbers? indicate they lived with you for at least 6 months of the year?  there is poorly worded question that asks if THEY contributed more than 50% of their living expenses; the answer is 'no'. 

Otherwise, on $4000 of income, you are eligible for 15% of the income that exceed $2500.  So 15%* $1500 = $225.  That is what you are otherwise eligible for.  That reflects 2022 is VERY different than 2021.  look at the "additional child tax credit' on line 28 of Form 1040 - that is where the $225 should be reflected.  Line 19 should be zero...

does that help? 

[Hal_Al]

 There are 6 possible reasons; you aren’t getting the Child Tax credit (CTC). It’s usually #4:

1. You’ve entered something wrong. In the personal Info section, for the dependent, you must select answers that indicate that he/she is your dependent child. If the child was born during the year, say he/she lived with you all year (note: TurboTax changed how this section is done two years ago, you may need to go thru the interview again or even delete your dependent and start over). If the child was with you for 6 months and 1 day, you need to mark that the child was with you 7 months. The CTC is not an automatic $2000, per child. It is income dependent. If you haven't entered your income yet, the CTC will not show.
2. Your child may be  too old (over 16). You can still claim your child, as a dependent. What you can't claim is the Child tax credit. This comes as a big surprise to many parents the year their child turns 17. A child over age 16 no longer qualifies for the Child Tax credit (CTC). Although a child can still be a student dependent through age 23, and a qualifying child for EIC,  the Child Tax Credit expires the year they turn 17 and you no longer get the $2000 CTC. Instead you will get the non-refundable (up to) $500 Other Dependent Credit.
3. Your income is too high. The Child Tax Credit (CTC) is phased out at higher incomes starting at $400,000 for joint filers  ($200K single). You lose $50 for each $1000 (rounding up) your income is over that threshold.   Previously it was $75,000 for single, head of household, and qualifying widow or widower filers; and $110,000 for joint filers.
4. Your income is too low.  The child tax credit  (CTC) is also limited to your tax liability. The CTC is a non-refundable credit and can only reduce your income tax to 0, It can not help you beyond eliminating your tax liability. But, if you have more than $2500 of earned income, some or all of it is usually given back to you thru the "Additional Child tax credit". That is, part of the CTC may be on line 28 of form 1040 (2021 & 2022) instead of line 19. The  ACTC is calculated on form 8812 and  is basically 15% of your earned income over $2500. The ACTC is a maximum of $1500 per child (not $2000).
5. You are the custodial parent and the non-custodial parent is claiming the dependent this year. The CTC goes with the dependency, even though the custodial parent still gets the Earned Income Credit, Dependent care credit and Head of Household.
   6. Another possibility is that part of your tax due is not regular income tax, but is self-employment tax (FICA), early distribution penalty or another type of additional tax, for which the CTC cannot be used.

To get a 'second opinion' on-line direct from IRS, try https://www.irs.gov/uac/is-my-child-a-qualifying-child-for-the-child-tax-credit

TT FAQ https://ttlc.intuit.com/questions/2625810-why-didn-t-i-get-the-child-tax-credit-or-why-is-it-less-th...

https://www.irs.gov/uac/Ten-Facts-about-the-Child-Tax-Credit

[NCperson]

detailed calculation of CTC and Additional Child Tax Credit

CTC = the lesser of $2,000 per child or the income  tax liability (line 18 of Form 1040). 

Additional Child Tax Credit = the lesser of 

1) $1500 per child

2) 15% of the income that exceeds $2500

3) $2,000 per child LESS the CTC calculated above. 

at the lower end of earned income, it is only the line in bold that really matters. 

[Hal_Al]

A child can be the “qualifying child” dependent of any close relative in the household. If you live with someone else, e.g. your parents, it may be better if they claim your child.

Instead, you could allow the non-custodial parent to claim the children.  Non-custodial parents are allowed to claim the child tax credit, but not the Earned income credit.

If you are a student, over age 23, and are not claimed as a dependent by someone else (e.g. your parent) you may be eligible for the up to $1000 refundable American Opportunity (tuition) Credit. That credit is not dependent on having either kids or earned income. You must be at least a half time undergraduate student. There's even a loop hole available to claim the credit, if you are on scholarship.

[mslaydiej]

So basically since I decided to go to school full time, I am only getting $225 for both of my kids lol that’s not even worth filing at this point. Ive made roughly the same before with one child and I got back $4k & that was in 2016. Really crazy.

[mslaydiej]

Yeah so basically I am being punished for going to school lmao I am literally getting $225 dollars back for my entire refund so I probably wont file oh well if they come after me not worth the hassle 

[Hal_Al]

$1225 if You are eligible for the up to $1000 refundable American Opportunity (tuition) Credit.