Advance payments in 2021 on child tax credit

[rgcaryjr]

The advance child tax credits are confusing me. We decided to take the advance credits for the 6 months starting July 2021 and were expecting to get the other half in 2022 of the $1500 based on the letter that went out from the Biden administration on 6/25/21. We qualify for this based on AGI so I'm wondering why I'm having to pay for Federal this year as I was expecting to get the extra $1500 when filing taxes and I'm not? We have our Federal tax withholdings set so each year we get less of a return or break just about even and have it spready out through the year, so maybe that's it? Since we meet the requirements to get the full $3000, half in 2021 and the other in 2022 should we be expecting the other $1500? 

[MinhT1]

If you answered correctly the TurboTax questions in the Child tax credit section, the balance of your child tax credit should be included in your refund (or subtracted from your tax due). It is not shown separately.

To check that the balance of the child tax credit is correctly included, you can preview your form 1040 and check that the child tax credit is correctly calculated on line 28 of your form 1040.

Please preview your form 1040 by following these steps:

1. In TurboTax, open your return
2. In the left-hand column, locate Tax Tools, click on the drop-down arrow then click on Tools
3. On the Tools Center page, click on View Tax Summary
4. In the left-hand column, click on Preview my 1040
5. Your form 1040 will display.
6. Scroll down to line 28 - Refundable child tax credit or additional child tax credit from form 8812 and you should see the amount of this credit on this line.

[rgcaryjr]

Hello MinhT1.

Thank you for the reply. I reviewed those areas and already entered the advance child care tax credits correctly per letter. I also reviewed 8812 and looked at all lines and where it mentioned the $3000 credit. When you follow the calculations on form 1040 or 8812 you end up with $1500 refund as shown in the forms, which I assume is in addition to the advance child credits. We are MFJ and last year (2020 return) we owed a little less than $600 on Federal since we have our federal exemptions adjusted to where we won't have as big of refund. This year with slight income increases while still MFJ we owe a about $900. I was hoping the second half of the $1500 advance child credit would have offset that, but it's not and that's where I get confused. Could it be that the 2021 AGI for MFJ is now above the limit to get the second half of the $1500 advance child tax credit?  We're still within the amounts to qualify for the full amounts.

I pulled this from the IRS website:

These advance payment amounts begin to be reduced if your modified AGI exceeds:

• $150,000 if married and filing a joint return or if filing as a qualifying widow or widower;
• $112,500 if filing as head of household; or
• $75,000 if you are a single filer or are married and filing a separate return.

[MinhT1]

Your child tax credit for 2021 is based on your 2021 AGI. It is not phased out if your AGI is less than $150,000 (for married filing jointly) and you should get the full credit of $3,000 for a child aged 6 to 17 (minus any advance) on your tax return.

Did you preview your form 1040 to check what amount is on line 28? (see my previous answer).

[rgcaryjr]

Thank you. Yes, it shows $1500 on line 28 from form 1040. Just for kicks I did the online estimator through HR Block and I'm due a refund of $428 (est.) and through Turbotax I'm paying almost $900 in Federal. I've went through this 2x already in Turbotax and reentered the numbers and still come up with paying almost $900. HR Block online estimator is only a few dollars off when looking at summary of taxable income, taxes paid, remain in same tax bracket, federal withholdings are same, so it's rather odd that this is happening. Maybe the cash out refinance of primary home did this, but the money for cash out went back into the bank for primary home repairs and only residence where we live. 

I really think Turbotax is not adjusting for the additional child tax credit we're due on line 28. Part of it was claimed in 2021, the other half should fall in 2022 because we meet those conditions per IRS.

I also noticed that form D-400 cannot be filed because the government is still working on that form. Maybe it's that causing all of this?

I can go through this again as our taxes are not complicated and I'd hate to pay anyone for a simple error, but having to pay Federal of almost $900 vs HR Block estimator saying I'll probably get $428 refund is a big difference and makes sense because if you subtract the $1500 I'm due from the almost $900 I owe you come out with a number very close to what was estimated through H&R. Recovery rebate on estimator is showing only $1400 for some reason. 

[MinhT1]

The recovery rebate credit is another subject. Did you receive the third stimulus of $1,400 per person for all members of your household? 

If you think that you are missing a stimulus payment, go through the Federal review and check the amount of the Recovery rebate credit.

In TurboTax Online, to claim the Recovery Rebate credit please do the following:

1. Sign into your account and continue from where you left off
2. Click on Federal in the left-hand column, then on Federal Review on the top of the screen
3. On the next page titled Did you [or your spouse] get a third stimulus payment?, answer Yes or No
4. Follow the interview and answer all questions
5. TurboTax will determine whether you are entitled to any additional stimulus
6. Any stimulus amount remaining due to you will show as a credit on line 30 of your form 1040.

Please read this TurboTax Help topic for more information on the third stimulus.

To check that the Recovery Rebate has been transferred to line 30 of form 1040 and included in your tax refund, please preview your form 1040 by following these steps:

1. In TurboTax, open your return
2. In the left-hand column, locate Tax Tools, click on the drop-down arrow then click on Tools
3. On the Tools Center page, click on View Tax Summary
4. In the left-hand column, click on Preview my 1040
5. Your form 1040 will display.
6. Scroll down to line 30 - Recovery rebate credit and you should see the amount of this credit on this line.

[rgcaryjr]

Thanks for hanging with me. Yes, I got it at $1400 PP, but like you said that's separate. I do have further information and H&R Block online tax prep does produce the same results at TurboTax showing I owe, with a few dollars or TurboTax. The H&R free estimator without actually creating an account does not show everything, which is expected.

Entering in all of the tax information goes well on both until you enter in the advance child tax credit of $750 for my wife and I and then it immediately jumps to owing Federal. My assumption on both prep sites was that I would be receiving another $1500 in cash with it be monthly at $250 for 6 months or a return on my taxes offsetting what I owe. It's not the case, but I'm not an expert to do line by line to see where the issue may be. Although I do show an additional refund of $1500 on line 28 on the 1040 it's not producing money in my pocket. I guess for a test I could remove it and see if my Federal amount due increases.

The way I understood the entire advance child tax credit is that I would get part of the $3000 in 2021 and the other half in 2022 after filing taxes, but maybe I will not get that until I file my taxes in 2023 for year 2022.

Other than paying someone to do my taxes or sitting down with me and running over line by line I do think it's more accurate now that I've tested with another online tax prep and entering data more than once. Never had this issue before until all this stimulus package stuff and advance child care tax credit started happening.

Unless you have anything else for me to look over I'm going with this. I do appreciate your time and guiding me along.

[MinhT1 · Accepted solution]

I can assure you that the remaining child tax credit of $1,500 is included in your tax return as it appears on line 28 of your form 1040.

[rgcaryjr]

Thank you. It's there, but as a credit and not cash in my pocket like I was expecting to offset what I owe. Oh well. 

[rgcaryjr]

Hey just wanted to let you know that I found the issue. Today I received letter 6475 from IRS that corrected the third stimulus amount and that offset the amount owed and corrected things. As letter states, this is not taxable and the amount I was entering was from the IRS website under an account I created looking at other credits trying to figure out what I should or should not enter which amounted to more than the $2100, an incorrect value. So if this passes with the IRS as it did with TurboTax error check we're set and okay. Stimulus credits and payments sure did confuse things this time around. 

[DawnC]

The stimulus payments coupled with the Advance Child Tax payments did cause much confusion this year.   These are new things to the tax code as well as taxpayers, so it is not surprising that there are hiccups along the way filing this year.   I am happy to hear you received an updated 6475 letter that provides some clarity on what transpired.  

[DaveCrook]

Me and my spouse received the advanced child tax credit for our son in the amount of $250.00 each month for six months ending in December 2021. We did not receive letters as we moved to a new home. Do we enter the total of $1500.00 that we received on each of our letters?

[DoninGA]

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@DaveCrook wrote:

Me and my spouse received the advanced child tax credit for our son in the amount of $250.00 each month for six months ending in December 2021. We did not receive letters as we moved to a new home. Do we enter the total of $1500.00 that we received on each of our letters?

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If the Total of the advance child tax credits received in 2021 is $1,500 then enter $750 for each of you where asked how much you each received.