IRS claims Schedule 8812 line 5 incorrectly calculated

[AnotherUsername2Remember]

I received a letter from the IRS today that mentions my Child Tax Credit was incorrectly calculated in my Schedule 8812 and I owe additional taxes.  When I reviewed my return TurboTax Schedule 8812 Line 5 says 6000.  When I crunch the numbers manually using the Schedule 8812 worksheet off the IRS' website I calculated 4000 (not 6000).

I'm confused as to how TurboTax miscalculated line 5 as the only manual input (for my scenario) is number of children. All the other inputs to the calculation are set figures based on simple ABC type scenarios.

How / where can I verify within my return how TurboTax came to the amount of 6000?

1. Multiply Schedule 8812, line 4b, by $3,600	0	0
2. Multiply Schedule 8812, line 4c, by $3,000	2	6000
3. Add line 1 and line 2		6000
4. Multiply Schedule 8812, line 4a, by $2,000	2	4000
5. Subtract line 4 from line 3		2000
6. Enter the amount shown below for your filing status		12500
• Married filing jointly — $12,500
• Qualifying widow(er) — $2,500
• Head of household — $4,375
• All other filing statuses — $6,250
7. Enter the smaller of line 5 or line 6		2000
8. Enter the amount shown below for your filing status		150000
• Married filing jointly or Qualifying widow(er) — $150,000
• Head of household — $112,500
• All other filing statuses — $75,000
9. Subtract line 8 from Schedule 8812, line 3		144000
• If zero or less, enter -0-
• If more than zero and not a multiple of $1,000, enter the next multiple of $1,000
10. Multiply line 9 by 5% (0.05)		7200
11. Enter the smaller of line 7 or line 10		2000
12. Subtract line 11 from line 3. Enter on Schedule 8812, line 5		4000

[KrisD15]

Line 5 on Schedule 8812 is always "at least" the number of qualifying children times 2,000.

Did you claim two children or three? 

How many children are on Schedule 8812 line 4c ?

[AnotherUsername2Remember]

I claimed 2 - as it noted on line 4c in my TT return.  I posted a screenshot of schedule 8812 from the IRS website as to the calcs.

[RaifH]

The $4,000 or $6,000 amount should be your total child tax credit since it doesn't appear that your income reaches the second phaseout amount of $400,000. If you did not receive advanced child tax credit payments, this would be the total child tax credit that was reported on Form 1040 Line 28. It would also be reported on Line 14i of Schedule 8812. If you received advanced child tax credit payments, your total credit reported on 14i and Line 28 of Form 1040 would be $4,000 or $6,000 minus the amount of advanced child tax credit received. 

It does look like, based on your Line 5 calculations your AGI of $294,000 exceeded $150,000 and TurboTax did not apply the first phase-out to the child tax credit. If this is correct, you should have gotten $2,000 per child age 6-17, not 3,000 as TurboTax appears to have credited you. I have not seen TurboTax miscalculate this form before. 

[lulutaxes3713]

I just did a tax return for my daughter with two children under the age of 6.  Turbo tax input $7,200 and it only calculates to $4,000 per the manual worksheet.  This is a huge concern.   That's a $3,200 error my the tax return!

[lulutaxes3713]

Turbo tax is incorrectly calculating Schedule 8812. My daughter has 2 kids under the age of 6 and the return shows $7,200 credit, but calculating the line 5 worksheet manually it comes out to $4,000.

[DoninGA]

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@lulutaxes3713 wrote:

I just did a tax return for my daughter with two children under the age of 6.  Turbo tax input $7,200 and it only calculates to $4,000 per the manual worksheet.  This is a huge concern.   That's a $3,200 error my the tax return!

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What amount is shown on the Form 1040 Line 28 for the Child Tax Credit?

You can view your Form 1040 at any time using the online editions. Click on Tax Tools on the left side of the online program screen. Click on Tools. Click on View Tax Summary. Click on Preview my 1040 on the left side of the screen.

Using the desktop editions, click on Forms.  In Forms mode open the Form 1040.

[lulutaxes3713]

$7,200

[DoninGA]

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@lulutaxes3713 wrote:

$7,200

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Then the Child Tax Credit is correct for 2 children under the age of 6 on a 2021 tax return.

The Child Tax Credit is entered on your federal tax return Form 1040 on Line 28. It is added to your other tax payments, it is not a separate refund. Your Total taxes from Line 24 are subtracted from your Total tax payments on Line 33. If you have an overpayment then that is entered on Line 34 as your federal tax refund.

[lulutaxes3713]

I don't understand how it can be correct....when I calculate it all manually it should be $4,000

[DoninGA]

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@lulutaxes3713 wrote:

I don't understand how it can be correct....when I calculate it all manually it should be $4,000

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If there was not any advance child tax credits received in 2021 then the full Child Credit on the 2021 tax return of $7,200 is correct as reported on Line 28 of the Form 1040.

Go to this IRS website for the Schedule 8812 - https://www.irs.gov/pub/irs-pdf/f1040s8.pdf

And instructions - https://www.irs.gov/pub/irs-pdf/i1040s8.pdf

[AnotherUsername2Remember]

We did receive the advanced child tax credit.  I'd like to know for certain if something I did in my return caused this or is it a mistake in Turbo Tax.  If the later I feel I should be compensated at least for the purchase of the software as I've incurred additional financial obligation due to this mistake.

[RaifH]

Line 5 will be $3,600 per child under 6 and $3,000 per child age 6-17 if your AGI is under:

• $150,000 if you're Married Filing Jointly or a Qualifying Widow
• $112,500 if you're filing as Head of Household, or
• $75,000 if you're Married Filing Separately or Single

If your AGI is above those amounts, then line 5 will be gradually reduced, down to a minimum of $2,000 per child. 

@AnotherUsername2Remember and @lulutaxes3713 are your AGIs (which, in most cases, is Form 1040 Line 11) above these thresholds?

[AnotherUsername2Remember]

Very disappointed with Intuit here.  I called yesterday spent nearly an hour on the phone trying to figure out how / why TurboTax provided the wrong calculation for SCH 8812 they informed me I need to file an accuracy claim.  To which I did - and it was immediately dismissed and closed.  Pathetic.

[mdwittwer]

Where do you find the information that line 5 gradually goes to $2000 when AGI is over $150,000?  I'm looking at the instructions and that is not indicated anywhere.  Thanks for your help.