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mterenteva
New Member

Have two kids,both under 17.self-employment income-$6.5k +W2(3.2k) Self employment tax is $1k. Although my additional childs credit is $900 don't get childs credit,why?

 
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Hal_Al
Level 15

Have two kids,both under 17.self-employment income-$6.5k +W2(3.2k) Self employment tax is $1k. Although my additional childs credit is $900 don't get childs credit,why?

The regular child tax credit ($1000 per child) can only be used to reduce income tax. It cannot be used as a credit against self employment tax. Since your income is not high enough to have any income tax liability (line 47 of form 1040 is zero), you do not get any Child Tax Credit (line 52 of form 1040).

But, if you have more than $3000 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 67 of form 1040 instead of line 52 . The ACTC is calculated on form 8812; that form is not viewable in the online version of TT until you have paid for your return. But, the ACTC is basically 15% of your earned income over $3000.

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3 Replies
Hal_Al
Level 15

Have two kids,both under 17.self-employment income-$6.5k +W2(3.2k) Self employment tax is $1k. Although my additional childs credit is $900 don't get childs credit,why?

The regular child tax credit ($1000 per child) can only be used to reduce income tax. It cannot be used as a credit against self employment tax. Since your income is not high enough to have any income tax liability (line 47 of form 1040 is zero), you do not get any Child Tax Credit (line 52 of form 1040).

But, if you have more than $3000 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 67 of form 1040 instead of line 52 . The ACTC is calculated on form 8812; that form is not viewable in the online version of TT until you have paid for your return. But, the ACTC is basically 15% of your earned income over $3000.

mterenteva
New Member

Have two kids,both under 17.self-employment income-$6.5k +W2(3.2k) Self employment tax is $1k. Although my additional childs credit is $900 don't get childs credit,why?

I tough so too, but found article that said:"Much like the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC) also applies to self-employment income. Enacted in 1997, the Child Tax Credit provides support to households with qualifying children and earned income.
Since self-employment income is “earned income” for the purposes of the Child Tax Credit, the tax prep-based formalizing process is significantly enhanced for low-income households by the Child Tax Credit. Unfortunately, a “broken” self-employment tax interface means that many new low-income businesses face unexpected tax liabilities at tax time. While these self-employed households may have no income tax liabilities, they inevitably have sizeable Social Security liabilities (the “self-employment tax”). Therefore, the Child Tax Credit, enhanced by Schedule C net profits, becomes critical in more than paying off this liability.
Hal_Al
Level 15

Have two kids,both under 17.self-employment income-$6.5k +W2(3.2k) Self employment tax is $1k. Although my additional childs credit is $900 don't get childs credit,why?

Yep, that wording is a little misleading.

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