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

[VolvoGirl]

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 

[whiteryan11]

@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?

[VolvoGirl]

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...

[VolvoGirl]

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.   

[NCperson]

@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?

[whiteryan11]

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

[Opus 17]

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@whiteryan11 wrote:

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

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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.