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Does the non-refundable clean energy tax credit on form 5695 apply before or after the child tax credit?

 
7 Replies

Does the non-refundable clean energy tax credit on form 5695 apply before or after the child tax credit?

Neither.  They are added together and subtracted from the tax on line 18.  They can only reduce the tax to zero.  See the 1040  https://www.irs.gov/pub/irs-pdf/f1040.pdf 

 

Does the non-refundable clean energy tax credit on form 5695 apply before or after the child tax credit?

@VolvoGirl I see where you are saying they are combined on line 18. However, in that case, how does the IRS differentiate between a refundable credit such as the CTC and a non-refundable credit in this situation?

Does the non-refundable clean energy tax credit on form 5695 apply before or after the child tax credit?

You might qualify for the Additional Child Tax Credit on line 28.  What is the Additional Child Tax Credit

https://ttlc.intuit.com/turbotax-support/en-us/help-article/taxation/additional-child-tax-credit/L6x...

Does the non-refundable clean energy tax credit on form 5695 apply before or after the child tax credit?

Just found this see Child Tax Credit - TurboTax Tax Tips & Videos

 

The Child Tax Credit in 2022 is not a refundable credit, so you can only use it to the extent you owed tax.  The Additional Child Tax Credit is a refundable credit (one you can get even if you don't owe taxes) but the amount of the credit that is potentially refundable is calculated by taking 15% of your earned income above $2,500. You get to claim the lesser of this calculated amount or your unused Child Tax Credit amount, up to $1,400 per qualifying child.   

Does the non-refundable clean energy tax credit on form 5695 apply before or after the child tax credit?

@whiteryan11 - this does get confusing as there are 3 tax credits being discussed

 

1) Energy tax credit - non-refundable but unused amount is rolled over to a future year if not used,

2) the Child Tax credit - non-refndable - "use it or lose it"

3) the Additional Child tax Credit - REFUNDABLE - "use it or lose it"

 

The Child tax credit is applied first on list 19 - to the extend it can be because it is 'use it or lose it"

Then the Energy Credit is applied - if it can't be totally used, it rolls over to the next year.  Look very closely at Line 14 on Form 5695  - that takes you to a worksheet where all this is reconciled.  


these two credits, since they are non-refundable, can not reduce Line 22 below zero. 

 

The Additional Tax credit stands on its own because it is a "refundable credit". Even if Line 22 is zero, you are still eligible for the Additional Child tax credit. 

 

does that make any sense?

Does the non-refundable clean energy tax credit on form 5695 apply before or after the child tax credit?

@NCperson Makes much more sense now. Thanks for breaking that down for me. 

Does the non-refundable clean energy tax credit on form 5695 apply before or after the child tax credit?


@whiteryan11 wrote:

@NCperson Makes much more sense now. Thanks for breaking that down for me. 


Part of the confusion is that special for 2021 only, the entire child tax credit was refundable.  For 2022, the credit is back to its usual rules.

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