TurboTax error with the code in box 3 on credit limit worksheet for form 8839

[stufordkm]

Error on credit limit worksheet for form 8839

We were only allowed $3300 on line 19 of our 1040, but for some reason the credit limit worksheet for form 8839 keeps pulling in $3800 for line 3. That amount is found on the schedule 8812 under 15a. It says it comes from a credit limit worksheet A. However, later in the form it says that only $3300 should be transferred to the 1040, which it is. However, somehow that $3800 shows back up on the credit limit worksheet for form 8839, which means we aren't getting our full deduction from the 8839 credit. In effect we are losing $500 in credits due to this error, unless there is something I don't understand?

[RaifH]

The credit limit worksheet includes other nonrefundable credits besides what is found on Line 19 of Form 1040. The missing $500 may be coming from one of these credits:

• Foreign Tax Credit, nonrefundable childcare credits and education credits, saver's credit found on Schedule 3 Lines 1 - 4
• Other less common credits found on Schedule 3 Lines 6d through 6g and 6l
• Residential energy credits found on Form 5695 Line 30

Since these credits are "use it or lose it" and the adoption credit carries forward, your adoption credit is used last and the remainder carries forward if you have one of these to reduce your tax this year.

[stufordkm]

The problem is I have credits, but I'm not getting them because the TurboTax program is showing that I'm getting $3800 from the Child Tax Credit on the credit limit worksheet, when on the 1040 it shows I'm only receiving $3300, which means on the 1040 we show to need to pay $500 in taxes that we shouldn't be because we have the adoption credit to cover it. Either we should show that we should receive $3800 from the CTC credit on the 1040 or on the credit limit worksheet we should show that we only received $3300 from the CTC.

My problem is that we have credit, but $500 is in limbo since there is some mixup in how things are being calculated.

We received $3300 in advance, but we should either show another $500 in credit for CTC or we should be able to access $500 more from the adoption credit.

Does that make sense?

[KrisD15]

Please check your 1040 line 19 for the 500 credit. 

It sounds like you may be eligible for the child tax credit of 3,300 which would be on line 28 and a credit for other dependent of 500 on line 19. 

[stufordkm]

We didn't get the refundable credit since we weren't physically living in the U.S. for over six months. So, we show $3300 on line 19, and zero on line 28. It looks like the schedule 8812 calculated everything correctly and entered the correct amount for us on line 19 since it is unrefundable. It entered the $3300, but on the worksheet for form 8839 to calculate how much of the adoption credit we can use this year it pulled the number $3800 form the schedule 8812 instead of the allowed amount of $3300 which was listed on the 1040 on line 19, leaving us with a tax burden of $500, which I don't think we owe???

[stufordkm]

I believe that $500 more should be taken from the adoption credits that weren't allowed on the 8812 since we weren't stateside for more than the six months required for the credit to be refundable.

[JohnW152]

The calculation you need to make is based on Credit Limit Worksheet B in the 2021 Instructions for Schedule 8812.  It’s a very complex process.

If you’ll notice the asterisked text at the bottom of the Credit Limit Worksheet — Line 15 box in the 2021 Instructions for Form 8839, it notes:

* If you are directed to complete Form 8839 by Credit Limit Worksheet B in the Instructions for Schedule 8812 (Form 1040), include the amount from line 14 of Credit Limit Worksheet B instead of the amount from Form 1040, 1040-SR, or 1040-NR, line 19.

Based on your statement that you “weren't physically living in the U.S. for over six months,” Credit Limit Worksheet B for Form 8839 would apply to you, since you presumably wouldn’t have checked a box on line 13 of 2021 Schedule 8812 (Form 1040).  (You would check one of those boxes if you (or your spouse if married filing jointly) had a principal place of abode in the United States for more than half of 2021 or you (or your spouse if married filing jointly) were a bona fide resident of Puerto Rico for 2021.)

Once you’ve completed Worksheet B, you’d plug line 15 of that worksheet into line 4 of Credit Limit Worksheet A, and this will result in the amount you’re seeing in TurboTax.

[stufordkm]

@JohnW152 

I did try to go look, but confirmed that you are right. It is quite complicated. If you are sure that there isn't an error in how the new CTC interacted with the previous data (as last year the adoption credit along with other credits brought our tax burden down to 0, then I guess we will just have to accept it. 🙂

It just seemed like it brought in different numbers. 🙂

[JohnW152 · Accepted solution]

Let me just say that there are no known issues in this complicated computation.  I can't see what's on your return, but based on the information you're providing, I believe the calculation made by the program to be correct.

At this point in the season, after pre-release testing and almost three months of actual taxpayer use, it would seem that any issues with the calculations would have come to light.